Global private equity firm, Hicks, Muse, Tate & Furst is refocusing its business activities. The Dallas and London offices will assume more of a pivotal role, while the New York and Buenos Aires divisions will be satellite offices. As a result of the changes, four departures have been announced.
Mike Levitt, partner at the firm’s New York office since 1996, and Hoon Cho, also based in New York, will both be leaving as a result of the firm’s intention to rightsize and refocus activities.
The changes follow talk that the firm is lowering expectations on the target close of its fifth investment vehicle, Hicks, Muse, Tate & Furst Equity Fund V. Expected to close at $4.5 billion, it is thought the new fund will not exceed the $3 billion mark. The fund managed a first close in January at $1.2 billion.
In addition, following difficulties fund raising in the Latin America region and a dampened institutional enthusiasm, the firm has decided to scale back expectations for its Latin America Fund II, that held its first closing last December at $125 million. Roy Winnick of the firm said: “We expect to have a final close in October and hope to reach $200 million in an extremely difficult fund raising environment. Under the circumstances, we are pleased to have raised what we have.” The firm’s first Latin American fund was a 1998 vintage fund that raised $864 million and is now fully invested.
In view of the reduced activity in Latin America, Cesar Baez and Tadd Chessen will leave the firm so that “their skills can be utilised more fully elsewhere.” The process of managing existing investments, namely the cable TV business and Pan American Sports, will continue to be led by three partners (Tom Hicks, Rick Neuman and Charles Tate), supported by a Latin American team of four (John Civantos, Marcos Clutterbuck, Christina Weaver and Robert Ellenbogen).
As part of the increased activity in the Dallas and London offices, the firm has promoted two investment principals to partner Peter Brodsky in Dallas and Lyndon Lea in London. Roy Winnick says the New York and Buenos Aires satellite offices will continue to function with a number of professionals in both locations, but there will be no partners based at those offices. In addition, the principal decision-making and deal making will be effected from the Dallas and London bases.
The Hicks, Muse investment team for Europe and the US currently looks as follows eight partners backed by 22 front-line investment professionals. In the London office there are 16 professional staff. To date, the firm has $11 billion equity funds under management and since 1989 has completed over 390 transactions with a total capital value of more than $50 billion.
In the past year, the firm has witnessed the distribution of over $3 billion in proceeds from the exit of several investments including Clear Channel, International Home foods, Mumm and Perrier-Jouet and Triton Energy.
Sign of troubles at Hicks, Muse first surfaced last year when it offered what amounted to an unprecedented 20 per cent guaranteed return to investors on its new fund being raised. It was understood this was warranted following a number of troubled technology investments in the previous fund.