Jim Millstein sees The Blackstone Group as a model for his fledgling financial services firm.
Just as Blackstone Group began as an M&A advisory firm then expanded into principal investing, so Millstein sees a similar opportunity for Millstein & Co., which he launched in February with the backing of New York money manager Third Avenue Management and its president, David Resnick.
The difference, said Millstein, a specialist in corporate turnarounds, is that his firm will focus its attention on restructuring deals. Millstein himself has long focused on the distressed sector, most recently at the U.S. Treasury Department, where he served as chief restructuring officer, working on a plan for the failed insurance giant American International Group.
In the 10 months of its existence, Millstein & Co. already has built a staff of 25 investing professionals, including eight in Washington, D.C., and it has established its New York offices in the same Park Avenue building where investment manager BlackRock Inc. maintains its headquarters.
One key hire in the early going: Michael C. Duran, who joined Millstein & Co. in August as a managing director. A 13-year veteran of buyout shop Ripplewood Holdings, Duran said he expects to focus on distressed companies in the mid-market. Millstein & Co. will have broad latitude to invest up and down the capital structure, including distress-for-control, debt-for-equity and rescue financing, Duran said.
In his role as a managing director at Ripplewood, Duran executed investments in a broad range of industries, from business services to consumer electronics and telecom equipment. Duran is only now settling in to his new role at Millstein & Co., but he said financial services is looking interesting, including areas such as bank divestitures, specialty finance and insurance and reinsurance companies.
Executives would not discuss plans for buyout fundraising at Millstein & Co.
In the meantime, Millstein is busy using the contact list he developed over a decade as a managing director and global co-head of corporate restructuring at Lazard and before that as head of the corporate restructuring practice at the law firm Cleary, Gottlieb, Steen & Hamilton, while also polishing his credentials as a big thinker on turnaround issues.
Among other things, he is advising US Airways on a bid for bankrupt AMR Corp., the parent of American Airlines; developing a private sector plan for the rescue of the moribund government-sponsored housing enterprises Fannie Mae and Freddie Mac; and offering opinions on the European banking crisis, recommending a program fashioned after the Treasury Department’s Troubled Asset Relief Program.