President-elect Biden eyes private markets for incoming administration

Private equity already looks to have a role in the incoming administration of President-elect Joseph Biden.

Biden, whose November election victory is being disputed by incumbent President Donald Trump, publicly named Antony Blinken as his choice for secretary of state.

Various media outlets also have reported he is considering either Michele Flournoy or Lloyd Austin as secretary of defense. Other potential candidates for the role include Tammy Duckworth and Jeh Johnson, Axios reported. All the individuals would need to be approved through a Senate confirmation process.

The three have worked in various capacities for a firm called Pine Island Capital Partners, formed in 2018 by ex-Merrill Lynch chief John Thain and former Goldman Sachs executive Phil Cooper.

Pine Island has been investing deal-by-deal since inception, and in November announced it raised $200 million in a special purpose acquisition company. SPACs raise money in the public markets to make an investment in one company within a specified period of time, usually two years.

While Pine Island works on its SPAC, it is understood the firm will eventually work to raise a traditional private equity fund as well.

Pine Island Acquisition Corp will search for investments in the “defense, government service and aerospace industries,” according to Pine Island’s S-1 filing. “We believe that we understand the suppliers and the domestic and international customers in these industries exceptionally well: we understand which programs and technologies are priorities, we understand the critical components of the supply chains, and we have an ability to assess and recruit top talent on an as-needed basis to improve our probability of success,” the filing said.

Flournoy joined Pine Island in 2019 as a D.C. Partner, which is the firm’s group of former government and military officials who draw on their experience for investment sourcing and execution.

She worked as under secretary of defense for policy from 2009 to 2012, according to her biography. In the 1990s, she worked as principal deputy assistant secretary of defense for strategy and threat reduction and deputy assistant secretary of defense for strategy, her bio said.

Austin joined the firm this year as a D.C. Partner. Austin is a retired four-star US Army general who spent three years as head of US Central Command. He also was combined forces commander in Iraq and Syria.

Blinken, meanwhile, is listed as “on leave” on Pine Island’s website. He worked as deputy secretary of state in the administration of President Barack Obama from 2015 to 2017, according to the firm’s website.

Other partners at Pine Island are: Clyde Tuggle, a former senior executive with the Coca-Cola Co; Lucas Evans, formerly a principal in the private equity group at Ares Management; David Horowitz, a former managing director in the principal investing division at Macquarie; and Wm. Russell Mann, who worked for three years as a portfolio manager at StratiFi.