5 questions with Jay Jordan

New York-based The Jordan Co. recently raised $3.6 billion for Resolute Fund II, which was more than twice what the buyouts firm raised for its previous fund in 2002. Chairman Jay Jordan says that the fund was oversubscribed. “We went out with $2.5 billion on the cover and set a hard cap at $3.6 billion,” he says. Jeremy Harrell, managing editor of PE Week’s affiliated publication Buyouts sat down with Jordan recently to talk with him about the fund.

Q: Did you cast a wider net for LPs with this fund?

A:

We spent a lot more time in Europe and brought in some European investors. With our prior fund, at $1.5 billion, there wasn’t room for a lot of European investors.

This time around, we were able to expand beyond our original investor base and attract even more pension funds for Resolute II. But European and Canadian investors were definitely a target for the new fund.

Q: This fund is more than twice the size of its predecessor. Can we expect any changes in the strategy or in the size of equity checks?

A:

The size of equity checks, yes. Strategy-wise, no. In fund I, we way underfunded ourselves. Our first fund should have been about $2.5 billion to $3 billion. A lot of deals that we did in fund I we had to syndicate and bring in other equity investors because we did not have the capacity to be sole investors.

Q: Why did you keep fund I so small in comparison?

A: At the time, we were transitioning into the limited partner world. From our prior investing, we had an existing portfolio of about 25 companies. We also had a number of affiliate operations, and we had to shut down some of those and sell off our 25 legacy companies. Therefore, we were a little bit intimidated by that, and felt that we didn’t want to raise too much money because we didn’t know how long it would take to sell off those companies successfully.

Our new LPs had no financial interest in our previous portfolio, so they really were not interested in us continuing to build them or spend much time with them. But we underestimated our capacity.

Q: Do you feel in some ways that this is not a new start—you’ve been in this game a long time—but that this is really the time you get to do what you want to do?

A:

We’ve been able to follow the market as the market grew. When I started out in private equity 34 years ago, our transactions had enterprise values of $25 million to $50 million. Those enterprise values are now $500 million, but they’re the same kinds of companies—they have just grown.

One of the reasons we went to the LP community is that we wanted to keep participating in the middle market, and without fresh capital from LPs, we would have been very limited.

Q: The name of your funds is the Resolute Funds. Where did the name come from and what does it signify?

A:

I didn’t want to call it “Jordan Fund” because that wasn’t fair to the team. We really wanted to get a non-eponymous name that indicated something. “Resolute” to us means stability, integrity, stick-to-it-iveness.

We threw around a bunch of names, and “Resolute” was the one left standing.