Done Deals: CSFB Finances Charter Schools Co. –

Credit Suisse First Boston Equity Partners LP, a $2.75 billion private equity fund, led a group of investors last month in a $28 million investment in Advantage Schools Inc., a for-profit education company. Other investors include Bessemer Venture Partners, Fidelity Ventures, Kleiner Perkins Caufield and Byers, United States Trust Company, Chase Capital Partners, and Nassau Capital. The fund invested $19 million in the transaction.

Advantage Schools is a company that operates charter public schools in urban cities nationwide. Advantage currently operates schools in cities including Worcester, Mass.; Dallas, Houston; San Antonio and Midland, Texas; Phoenix, Arizona; Chicago; Charlotte and Rocky Mount, N.C.; Jersey City and Newark, N.J.; Philadelphia; and Kalamazoo, Mich.

“I have a personal relationship with Steve Wilson, the company’s chief executive officer, and also with some of the existing investors in the company,” said Hartley Rogers, managing director and co-head at CSFB. “So we were brought in to do an expansionary financing of the company.”

“It’s absolutely clear that education is a critical issue facing the country,” said Rogers. “We believe that this is something for which the customer demand is extraordinarily high. If you look at the number of Advantage schools they will have 500 kids enrolled and another 300 to 400 on the waiting list. This is a result of an incredible demand for a high quality of education.”

CSFB retained one seat on the company’s board of directors. The capital will be used to open at least 10 new urban charter schools in cities nationwide in the fall and expand the resources available to existing schools by hiring new teachers and purchasing more classroom materials.

“I think chances are very good that we will make further investments in this sector,” said Hartley.

Credit Suisse First Boston Equity Partners LP closed on $2.75 billion in September 1999 and is managed by John Hennessy, Michael Schmertzler and Hartley Rogers (BUYOUTS Sept. 27, 1999, p. 12). Rogers said the fund has already invested about $425 million and expects to invest a total of $600 million by September 2000.

Credit Suisse First Boston Equity Partners LP invests in buyouts, later stage financing, and minority investments in publicly traded companies.