Brazos Nabs Hicks Pros, Launches $150M Fund –

Brazos Investment Partners, the new buyout firm born of a union between a former Hicks, Muse, Tate & Furst Inc. principal and partners at hedge fund Maverick Capital, last month brought on board two additional former Hicks Muse professionals to manage its debut fund.

Brazos Investment founder Jeff Fronterhouse will be joined by Patrick McGee, a former Hicks Muse principal, and Randall Fojtasek, the chief executive of a former Hicks Muse portfolio company.

In addition, the Dallas-based trio last month began marketing its debut private equity fund after giving a first peek to Maverick limited partners. Brazos Equity Fund has a target of $150 million and a cap of approximately $250 million, McGee said.

The fund will look for buyout and growth financing opportunities, concentrating its efforts on a broad range of industries across Texas and the Southwest (BUYOUTS March 22, p. 6).

“Texas and the surrounding region is a very vibrant and diversified economy, and the nature of our funds going forward will be diversified,” McGee said.

Brazos Investment will look for buyouts and recapitalizations with values of between $25 million and $150 million. In addition, the fund will make a limited amount of growth investments of between $1 million and $5 million.

Fronterhouse and McGee joined Hicks Muse in 1991 and 1994, respectively. While there, the two met Fojtasek, whose company, Atrium, a building products concern, was purchased from Heritage Partners in 1997. Hicks Muse later sold Atrium to GE Investments, where Fojtasek stayed until recently. Atrium, a Fojtasek family business, saw earnings increase to $44 million per year from $12 million per year during Fojtasek’s tenure as CEO from 1993 to 1999. McGee said Fojtasek will be valuable in doing deals with family-owned businesses because of his experiences in guiding his own business through three private equity transactions.

Maverick, with almost $4 billion in assets, is headed by Lee Ainslie and Evan Wyly. The fund trades only public equities. Brazos Equity has commitments from Maverick partners, as well as professionals from the lower rungs of the organization. In total, professionals from the two firms will contribute approximately $30 million to the fund. The hedge fund will share research and deal ideas with Brazos Investment. McGee said Maverick will use its public-market relationships to introduce Brazos Investment to divisions within publicly-traded companies that wish to be bought out. The hedge fund will also identify small-cap companies it believes could be taken private.

Communication between the two firms will not be difficult-Maverick and Brazos Investment happen to be located on the same floor of the Crescent Court office building in Dallas.

Fronterhouse said Maverick L.P.s, of which there are close to 600, have shown interest in the private equity fund, particularly the European investors, who see a middle-market regional vehicle as a unique opportunity.

Some partners from Hicks Muse also will invest in the fund, McGee said, though no formal deal-sharing relationship has been established. The partners at Brazos Investment hope to target a deal space that Hicks Muse long ago vacated in favor of large transactions.

Brazos Investment should have a first close early next year, McGee said.