AIP’s Lawrence Ward Leaves For Fremont During Fund Raising –

Lawrence Ward, a former principal at American Industrial Partners who had been at the group for nine years, left last month to become a managing director at Fremont Partners. The timing is potentially difficult for AIP, which is in the middle of raising $1 billion for its third buyout fund.

The New York and San Francisco-based group launched American Industrial Partners III, L.P. in the summer (BUYOUTS Aug. 17, 1998, p. 6) and has not yet held a first closing. AIP expects to hold a first close in the next month, said Richard Bingham, one of the firm’s co-founders.

He said fund raising was going well and losing Mr. Ward will have little impact on the firm. He added that the group has eight remaining partners, five of whom have the same amount of experience in private equity as Mr. Ward.

However, a few months ago in an interview about generational changes at buyout firms, Mr. Bingham described Mr. Ward and two or three other partners which he did not name as the core of the group.

Addressing a question about the possibility of partners leaving his firm, he had said, “So long as we are successful and we’re moving ahead, there is little risk of anyone leaving AIP.”

Mr. Bingham now says that Mr. Ward’s resignation was unexpected but that it had little to do with the internal workings at his firm.

Looking for Broader Opportunities

For his part, Mr. Ward said he left because of the opportunity to expand his skill set at San Francisco-based Fremont. He will largely be co-managing Fremont’s $605 million buyout fund, taking over for Gilbert Lamphere, who resigned from the San Francisco-based group about a year ago, said several sources close to Fremont (BUYOUTS April 6, 1998, p. 4).

“I left AIP because I felt the opportunity at Fremont was particularly attractive,” Mr. Ward said. “Fremont has a broader investment focus, and I will be focusing on a broader set of opportunities than just industrial companies.”

Mr. Ward said he and the partners at AIP parted on good terms.

“It’s true that I resigned after they initiated the fund-raising process, so the timing is unfortunate. It just had to do with the timing of when the Fremont opportunity arose,” he said.

AIP has had personnel turnover in the past; Michael Beaumont and Gottfried Tittiger, both former principals from 1991 to 1996, spun off two years ago to form Industrial Growth Partners, which follows the same investment mandate of American Industrial Partners but focuses on smaller deals.

Several AIP limited partners said they would soon conduct due diligence on Fund III and would ask about Mr. Ward’s resignation.

“His resignation will be taken into consideration, but the key will be their investment performance,” said Donald Desfosses, the director of trust funds management at Champion International Corp., adding that it is too early to tell how the $574 million Fund II is faring.

Merrill Lynch & Co. is the placement agent for Fund III.