Nine private equity professionals have been recruited for 3i’s new growth capital business in the US. The team is headed by Robin Marshall, a six-year veteran at 3i and former managing director of its UK business, alongside Whitney Bower, who joined 3i from Bain Capital Ventures in December 2005, and Ken Hanau, who left US mid-market firm Halyard Capital last October. A further six have joined the business and the team is set to recruit a further five professionals this year.
Marshall was known to have been on a “scouting trip” in New York in late 2005 and a 3i spokesperson confirmed that its decision to launch a US growth capital operation had come from the number of opportunities sourced by its venture capital operations, which have been active since 1999 in Boston and California. 3i stressed that it would continue to make venture capital investments in the US.
The growth capital team will focus on businesses with enterprise values of between US$50m and US$1bn and will typically make minority or control investments of US$20m to US$200m. Typical target sectors include media, business services, technology and consumer, energy and healthcare.
“Nobody in the mid-market in the US, or anywhere in the world, can match our network on either a sector or a geographic basis,” said Marshall. “This translates into high quality deal flow, and an ability to add real and substantial value to our portfolio companies.”
The move is part of 3i’s strategy to diversify beyond buyouts and Europe. In the past few years, the firm has opened offices in Mumbai, Shanghai and Beijing, which almost solely focus on growth capital investments; launched a private investment in public companies unit; and made a number of limited partner allocations to funds focused on Israel, Russia and Japan.
3i averages US$1bn in growth investment globally, with transactions made from the company’s balance sheet. Recent transactions include investments of €30m in Belgian renewable energy business Electrawinds and US$200m in Singapore-based reinsurer ACR, the sale of French online real estate directory Poliris and the realisation of Swedish construction business Alimak Hek in a US$310m deal.
CVC Capital Partners’ New York office will be run by managing partner Christopher Stadler, formerly head of private equity, North America, for Bahrain-based Investcorp. He will be joined by Rolly van Rappard, managing partner and co-founder of CVC Capital Partners Group.
The firm said that the New York office, which brings its global office tally to 17, would enable it to pursue companies with global operations while maintaining a local presence in the regions in which it invests.
“Establishing our business in the United States is a logical step as we make the final move in our geographic expansion,” said Michael Smith, chairman of CVC Capital Partners Group. “This addition to our network gives CVC a significant presence in the three largest economic regions around the world.”
Another major European buyout firm to have made inroads in the US is Permira, which opened a New York office in 2002, bolstering it with the appointment of managing director Thomas Lister from Forstmann Little & Co in late 2005.