Boutique advisory shop Greenhill & Co. and its investment arm,
Robert Niehaus, chairman of Greenhill Capital, is leading the $25 million buyout of the LBO shop, which is being paid for principally in Greenhill common stock. Niehaus will remain a senior advisor to the firm following the spin-out, which is expected to close in the coming weeks. The firm will retain the Greenhill name and will continue to operate out of Greenhill & Co.’s New York offices for the next five years or so, Niehaus says.
Greenhill & Co. will continue to pitch deals to Greenhill Capital, and an incentive plan has been created within the advisory shop to reward professionals for transactions they help source for the buyout firm.
“In the early days of the firm’s life, both sides really needed each other,” says Scott Bok, co-CEO of Greenhill & Co. “Together they gave us greater scale, brand-name recognition, and synergies in terms of advisory and investment opportunities. We concluded we could keep the good stuff without trying to run an investment business on a public company balance sheet.”
Greenhill & Co. previously fronted about 10% of the investment arm’s funds and will make a much more modest commitment with regard to the firm’s upcoming third fund, Bok says.
However, he expects personal investments from professionals at both the advisory and investment shops to reach close to that same amount.
Greenhill Capital expects to raise its third fund in the first quarter of 2010. Sources close to Greenhill Capital previously said that it would target $1 billion to $1.25 billion, but Niehaus says the target would be closer to the $875 million the firm raised for its second fund, which closed in 2005.
The firm’s second fund is more than 80% invested, he says.
Greenhill Capital invests in specialty finance, telecommunications, insurance, reinsurance, business services and energy. It typically writes equity checks of $10 million to $100 million per transaction. Portfolio companies include Stroz Friedberg, a New York-based Internet technology consulting and services firm in which Greenhill Capital invested $30 million in January 2007; and BreitBurn Energy Co., a Los Angeles-based oil and gas exploration and development company Greenhill Capital bought last month for $305 million. —Bernard Vaughan