B of A Spinoff North Cove Plans New Fund

North Cove Partners will begin raising a new fund soon, but not before the fall, according to a managing partner at the buyout shop, spun off in June from Bank of America Corp.

First, the firm plans to move to new offices in New York, to get out of the Charlotte bank’s office space and to set itself up as an independent company, Chris Birosak told Buyouts. “In the near future, we will go out and raise third-party capital, but it’s not something we’re doing immediately,” Birosak said. He declined to talk about the size of the fund that the firm plans to raise.

North Cove Partners begins life with an investment portfolio worth $6.2 billion at current values, Birosak said. Those assets actually remain on the bank’s balance sheet, and the firm will continue to manage them for a fee. The portfolio includes the hospital operator HCA, the auto-rental firm Hertz and the French electrical parts distributor Rexel.

North Cove Partners principals have invested in 12 portfolio companies since 2004, the firm said in announcing its spin-off. Birosak said the firm would focus on “industries where we have expertise and contacts,” including health care, energy, consumer products, financial services and some industrial sectors.

Birosak is one of three managing partners at the firm, along with Brian Gorczynski and Angel Morales. The three men have worked together for eight years, first as managing directors at Merrill Lynch Global Private Equity before B of A acquired it in January 2009 in the wake of the financial crisis. They head a group of 15 investment pros at the new firm.

For B of A, the spinoff is its last major private-equity operation, as the bank responds to the Dodd-Frank financial reform law and refocuses on its core banking business. Last summer, B of A spun off Banc of America Capital Investors to form Ridgemont Equity Partners as an independent buyout shop.

The business that was known as BAML Capital Partners most recently, before this month’s spinoff, was part of a larger equity business called Global Principal Investments, which the bank still retains, said Jackie Fine, a bank spokeswoman. Rather than a response to Dodd-Frank per se, she characterized the spinoffs as a business decision.

“We have determined that Global Principal Investments are not strategically critical to our business going forward,” she said. So rather than continuing to invest in the private equity asset class, “the goal will be to return capital.”