Beyond Bass

Private equity is an apprenticeship business. When the apprentice works for a very private family office, it might be said that a sense of fiduciary duty is deeply, deeply instilled. Witness the many notable careers in the private investment industry that have emanated from the Bass brothers of Fort Worth, Texas. Robert Bass, in particular, has at one point or another been an employer of quite a cast of private equity characters. The industry ties to the Bass family are presented here, starting on the right hand side.

Barrack, the chairman of Los Angeles-based private equity real estate investment firm Colony Capital, oversees $14 billion in business and property assets around the world. He founded Colony in 1991 after working as a principal investor for Robert Bass. Prior to that Barrack was at Oxford Development Ventures and, before that, served as Deputy Undersecretary of the Department of the Interior for the Reagan administration.

Known to all as the co-founder and investment wizard behind Texas Pacific Group, and to his friends as “Bondo”, Bonderman began working for Robert Bass in 1983 and rose to become chief operating officer of the family office. During his 10 years with Bass, Bonderman made huge profits investing in troubled cable companies and savings and loans. When Bonderman struck out on his own in 1992, he joined forces with Lehman Brothers banker James Coulter, who had also previously worked for Bass. Their first deal together became a private equity classic – the buyout of Continental Airlines.

Grayken is the founder and chairman of private investment firm Lone Star Funds. Grayken, a former hockey player from South Boston, founded Lone Star in 1995 and has built it into a $14 billion distressed-debt empire with activities in North America, Europe and most recently some major deals in Asia where Lone Star is currently one of the biggest owners of golf courses in Japan. Grayken cut his teeth in the early 1990s with Robert Bass buying up bad loans in the wake of the Savings and Loan crisis. Lone Star employs more than 1,000 people who pour over mortgage and loan records in search of market intelligence. Grayken switched from US to Irish citizenship and now reportedly lives primarily in London.

Offensend was, until a year ago, the vice chairman of Evercore Partners, the private equity and advisory firm based in New York and Los Angeles. Offensend founded Evercore in 1995 with Austin Beutner and Roger Altman. Prior to co-founding Evercore, Offensend worked for five years for Robert Bass as a managing partner, overseeing a $1.8 billion leveraged acquisitions portfolio called Acadia Partners, which was succeeded by Oak Hill Capital. Offensend is now senior vice president and chief financial and administrative officer of The New York Public Library.

Doctoroff joined Bass in 1987. While working for Bass as managing partner, he became involved in the management of a $540 million vehicle called Insurance Partners Advisors, which made structured transactions in that industry. He was also involved in the launch of the first Oak Hill Capital Partners fund, which raised $1.6 billion, much of it from outside investors. Doctoroff left Oak Hill in 2002 to become the deputy major of New York City under Michael Bloomberg. Since then he has worked on the reconstruction of the World Trade Center and was a chief advocate for New York's failed bid to host the 2012 Olympics.

The Bass family investment saga began when, in 1959, Perry Bass inherited the fortune of his Texas oilman uncle, Sid Richardson. Perry had four sons – Sid, Ed, Robert and Lee. The four formed a holding company for their family assets called Bass Brothers Enterprises. In 1968 Perry gave control of his business interests to Sid. With hired gun Richard Rainwater, Sid and his brothers launched into a string of successful investments, including major stakes in Walt Disney and Texaco. In 1983, Robert decided to strike out on his own.

After splitting from the Bass Brothers holding company in 1983, Robert began a string of investments that soon gained him a much higher profile as an investor. As the 1980s rolled on, he saw huge windfalls on the acquisition and exit of Taft Broadcasting and New York's Plaza Hotel, which was sold to one Donald Trump for $410 million. Robert is described by those who know him as practical and intense. In a 1988 New York Times article, a Yale University roommate says he remembers Robert heavily researching the purchase of a moderately priced Opal GT automobile.

Today Robert overseas Oak Hill Capital Partners, a home office with more than $16 billion under management across private equity, special situations, debt, real estate and hedge funds. Leading the private equity effort is J. Taylor Crandall. Other investment pros currently working for Robert include Myron Scholes, a Nobel Prize winning economist, Steven Gruber, Mike Spence, Denis Nayden, Andy Nathanson and Glenn August. Last year Oak Hill hired former head of alternatives at CalPERS, Richard Hayes, to develop a third-party fund investment programme.

In September, Oak Hill Capital Partners raised $2.5 billion in a second third-party private equity vehicle. Limited partners included CalPERS and Bill Gates.

In addition to gaining a reputation as a top-decile money manager, the Robert Bass family office has also served as a launch pad for a number of very high profile private equity investors.

Following the split with Robert in 1983, the other brothers, led by Sid, continued to be involved in the investment activity of the Bass Brothers holdings, with a strategy overseen largely by Sid's Stanford University classmate, Richard Rainwater.

From 1970 until 1983, Rainwater was the chief investment strategist for the Bass Brothers. A graduate of the University of Texas at Austin, Rainwater met oldest brother Sid Bass at Stanford Business School. Rainwater is often credited with vastly increasing the net worth of the Bass family from a starting point of $50 million to roughly $4 billion. After going independent in 1983, Rainwater went on an investment tear, creating oil field services companies, healthcare companies and insurance companies. Like the Bass family he worked for, Rainwater lives in Fort Worth, Texas, and recently referred to himself as “a retired guy”.