Tom Hicks is the latest global heavyweight to announce plans to leave the private equity business earlier than expected. The chairman of Hicks Muse Tate & Furst told investors he would step down from the firm he co-founded on January 1, some three months ahead of schedule.
Hicks, 58, announced his plans at the firm’s recent annual partners meeting. He had previously indicated he would leave in March. The new chairman of the 15-year old firm will be John Muse, currently president of the business he also helped to create.
Hicks will form a holding company, Hicks Holdings LLC, for his sports and real estate assets, which include the Texas Rangers and Dallas Stars. It will not compete with Hicks Muse and will focus mainly on buyouts in the US$10m to US$50m range.
Like many US firms, Hicks Muse has been expanding its profile in Europe. The firm recently acquired Weetabix for £642m in a high-profile buyout that set the debt markets ablaze with a controversial downward flex.
Hicks’ departure will precede that of Ted Forstmann, one of the founders of Forstmann & Little. Forstmann, a less active force in Europe, may wind down his existing fund before he retires in 2006. He said recently that he did not like the institutionalisation of the business and has already cut management fees on the firm’s latest fund by half. The vehicle has about US$1.5bn left to invest.
Forstmann Little dates back to 1978. In recent months the firm was embroiled in a law suit filed against it by Connecticut’s state pension fund. The dispute centred on two US telecom deals, McLeodUSA and XO Communications, which filed for bankruptcy and preceded the lawsuit in 2002.
After a trial, a jury found Forstmann’s company had breached its contract by investing in the companies, but awarded no damages. Connecticut’s Treasurer later appealed.
Forstmann was a groundbreaker of the leveraged buyout market in the 1980s. In 1989 he battled for control of RJR Nabisco, the food and tobacco company that was eventually sold to KKR.
Private equity giant KKR is also undergoing changes. The firm has announced that Johannes Huth will take over as its new European head. Huth replaces Ned Gilhuly, who is returning to the US after an extended stay in Europe. Huth joined KKR in 1999 from Investcorp. KKR is in the process of raising its second European fund, which has a target of E3bn. Its recent deals include the exit from Tenovis, the German telecom equipment manufacturer. The firm has just returned around US$9bn to investors in the last 18 months, trumping a US$6.6bn payout from Carlyle.