Hicks not quite done with private equity

Tom Hicks last week returned to the private equity realm, with an announcement that his family investment office, Hicks Holdings LLC, has acquired liquid crystal display maker Ocular LCD Inc.

The 59-year-old Hicks retired in December 2004 as chairman of Hicks, Muse, Tate & Furst (HMTF) after more than 30 years spent popularizing the “buy-and-build” model of leveraged buyout investing. At the time, he said that he wanted to devote his full attention to his sports franchises and real estate development company, Southwest Sports Realty.

His decision to step away from the firm he founded more than 15 years ago was also family-related. Hicks said he intended to spend more time with his oldest child, who began to work alongside him on the Texas Rangers baseball franchise and Dallas Stars hockey team. Hicks also said he wanted to help his six children establish themselves professionally.

“As I approach my 60th birthday, I have found it increasingly difficult to find enough time to be with family; to pursue with them our shared interest,” Hicks previously told PE Week. He reiterated those goals in a recent interview with PE Week, but added that he also would participate in between one or two private equity deals per year via Hicks Holdings.

At HMTF, pre-marketing is just gearing up for HMTF VI. Fund V is a $1.6 billion vehicle that was raised in 2000.

So what brought Hicks back to the private equity market, and why would he rather invest via a family office than through another HMTF fund? The basic answer, Hicks says, is that the fund structure itself had become too constrictive.

“We have a much longer-term investment holding period than HMTF or other LBO firms,” Hicks said last week before heading off for a charity golf outing. “Our goal is to build long-term value, not IRRs… 2x might be a great IRR for an LBO firm, but we want 10x over 10 years.”

The strategy of Hicks Holdings will be to buy niche companies that it believes are market leaders. It will do small-to-mid-sized deals like Ocular LCD alone, but is willing to club up for larger transactions.

Ocular LCD is based in Richardson, Texas, with a primary manufacturing facility in China’s Guan Dong province. It makes passive and active liquid crystal displays, which it sells in panels, modules and complete systems.

Hicks will be one of three Hicks Holdings board members on Ocular LCD. The others are Christina Vest (a former HMTF principal) and Hicks holdings chief operating officer Joe Armes.