Lightyear Bolsters Stable –

After 17 years at Warburg Pincus, Stewart K.P. Gross has left to join Lightyear Capital. At his new firm, Gross will serve as a managing director and member of its investment committee.

The move comes as both Warburg Pincus and Lightyear are in the midst of raising new funds. Warburg is targeting a $7.8 billion fundraise while Lightyear is aiming for $800 million, and the difference in size helped play a part in Gross’s decision. “I had decided sometime back that I wanted to do something in a smaller environment,” he told Buyouts, noting that he had looked at multiple groups before committing to Lightyear.

Lightyear, meanwhile, had been coveting an executive with a background in the financial services space, and Gross fit the bill. “We have a focus on financial services, and we do a lot of top-down work looking at the growth opportunities in the space,” Lightyear Chairman and CEO Donald Marron said. “It’s a high growth sector and an area in which we’d like to do more things… and Stewart has substantial experience there.”

Indeed, while at Warburg, Gross was integral in the firm’s activity in the sector, including its investments in Renaissance Reinsurance, tax preparation software maker Intuit, portfolio management software developer Eagle Investment Systems and BEA Systems, which makes transaction processing software.

Lightyear, for its part, has been very active in the space as well, having invested in education finance company Collegiate Funding Services, DeepGreen Financial, an online home equity lender, and processing solutions provider Private Business Inc., among others.

“The financial services industry is one of the fast growing areas,” Gross said. “In the U.S., [the sector] has been growing at twice the rate of the GDP… It doesn’t have any inherent limitations that other sectors have. A lot of it is about innovation, the intelligent use of technology and meeting new consumer needs.”

Moreover, Lightyear is operating under the belief that private equity as an asset class has been underweighted in the financial services space. Marron said, “Financial services represents about 20% of the S&P, but in the private equity world it’s less than half of that number.”