The smiley face of Capitalism

Park Square Capital’s offices are conveniently located in the private equity heartland of Green Park in London. For a firm that prides itself on its partnership-based approach to investing which often sees it sandwiched between banks and sponsors in the capital structure, it’s an appropriate location. Private Debt Investor is here to meet its co-founder, managing partner Robin Doumar.  

Doumar was a leading light at Goldman, head of its mezzanine division in Europe. But in 2004, after consultation with close friends David Cottam and Michael Small, he stepped away from Goldman to launch his own venture alongside the pair.

Did it feel like a gamble at the time?

“Our first fund didn’t feel like a lot of risk, but looking back at it, it probably was,” Doumar reflects.

The fund, Park Square Capital Partners, raised a then-record €1.05 billion when it held a final close in 2005, making it for a time the largest mezzanine fund raised by an independent (i.e. non-bank) group. The key to its success was the support it received from some heavyweight LPs, as Doumar explains.

“We were supported by a couple of large Canadian pension plans: Ontario Teachers’ and Caisse des Dépots [et Placement du Quebec]. They provided a very large quantum of capital and around that we went and raised commitments from some other large institutional investors,” he says.

Ontario Teachers’ and Caisse des Dépots are no doubt glad they backed a winning horse: the fund has to date returned about €1.3 billion, according to Doumar, and it still has a significant slice of the portfolio outstanding. “It looks like the returns on that fund will be top quartile, even related to private equity of that vintage, which is very good. That fund will do about 1.7x money based on our projections,” Doumar predicts.
 

Goldman and beyond

But just how did the urbane Doumar find himself at the helm of one of Europe’s largest private debt fund managers?

Doumar’s career in banking began after college [Brown] and then business and law school [University of Virginia], when he joined Goldman Sachs in 1989 to do high yield bond work. This was the year Barbarians At The Gate was published, with leveraged finance in its heyday.

“I was particularly interested in junk bonds,” Doumar recalls. “I joined as an associate in what was corporate finance at the time and I was fascinated by high yield bonds – that’s what I was determined to focus on.”

But for once, the timing wasn’t propitious. “Right after I joined, the world went to hell in a handbasket from the standpoint of high yield,” he says. Although a setback, it led Doumar down a different path that would stand him in good stead in years to come.

His focus shifted to restructuring work. “I focused on restructuring because most of the big Drexel Burnham Lambert buyouts had gone bust. They used to take out a two-page ad in the Wall Street Journal listing all of their companies and we would take a whiteboard marker and just strike them off as they went bankrupt. That included a bunch of interesting workout assignments like Greyhound bus lines and Doskocil (which made sausage casings). I worked very closely with the Marriott spinout the Pulman Company, and many others.”

Having ticked the high yield and restructuring boxes, Doumar then joined Goldman’s fledgling commercial lending unit working on senior loans. He moved to Europe in 1997 to build out the firm’s leveraged finance business there, doing both high yield and leveraged lending. “We built that into a market-leading franchise. I then moved into the principal investing area within Goldman to head the mezzanine effort,” he adds.

It was during that time that he began to mull the idea of flying the coop. Together with Cottam and Small, two longstanding friends, he decided it was time to launch his own venture, and Park Square Capital was born. Cottam had worked with Doumar in the leveraged finance team at Goldman, before leaving to become co-head of global media and telecom corporate finance and then head of international equity capital markets at BNP Paribas.

Small, a director at Dresdner’s principal finance group back then, knew Doumar and Cottam as his bank had been a lender to the Goldman mezzanine funds. “He was sort of an ex officio member of the Goldman team,” Doumar says.

The trio resigned on the same day from their respective jobs and founded Park Square in late 2004. They then set about raising a maiden fund, with a lofty target of €1 billion which they met comfortably. 

Doumar, Cottam and Small set about raising a sophomore vehicle in 2011. They reportedly earmarked €1 billion, but Park Square Capital Partners II ended up closing on €850 million.

“We took a bit of a step back in terms of fund size in order to create a more diversified, independent platform in terms of limited partners. We moved away from a concentrated investor base. That was an important step for us,” he explains.

After just two years, the fund is almost fully invested. It can’t be long before the firm returns to market with another mezzanine vehicle.

In between its two flagship funds, Park Square took the strategic decision to diversify into senior debt-focused funds, raising Park Square Capital Credit Opportunities in 2007, which raised €593 million, and PSCP Credit Opportunities B in 2011, which raised €250 million. This year, it raised Park Square Capital Credit Opportunities II, its first dollar-denominated vehicle, which garnered $524 million in commitments.

The Credit Opportunities suite of funds pursue a similar type of company to their junior debt-focused siblings, but just aim to be higher up the capital structure.