Mt.Kellett proves a steep climb for ex-Goldman partner
HONG KONG (Reuters) - The founder of Mount Kellett Capital is finding that not everything he touches turns to gold.
Mark "Goldfinger" McGoldrick, who earned a reported $40-$70 million annual bonus when at Goldman Sachs in 2006, has struggled to get his new investment fund off the ground, underscoring how tough it can be for hot-shot Wall Street bankers to strike out on their own as investors, especially in volatile Asia.
Mt. Kellett has downsized its staff by around a third in Hong Kong and has ditched plans for a Beijing office, according to three financial industry sources with business ties to the firm.
One of the firm's three co-founders has left, and it also recently lost its Greater China head.
The loss of high-profile managers is likely to cause concern among institutional investors, who typically commit hundreds of millions of dollars to private equity firms and hedge funds. They will want to know what's behind the departures and whether or not there will be a strategy shift as a result.
Among those who agreed to invest in the firm are Singapore state investor Temasek and several Goldman Sachs partners, according to media reports.
McGoldrick, a 1981 graduate of Bowdoin College in Maine, earned his monicker at Goldman Sachs where, as co-head of the bank's Global Special Situations Group, he turned the unit into a money making machine, according to sources at the bank.
He saw the 2008 financial crisis as a rare chance to snap up assets cheaply, according to the three sources cited above, but Mt. Kellett has not yet executed a single high-profile deal.
By comparison, Hopu Investments, a China-focused fund run by Goldman veterans, has struck several large deals since it launched a few years ago.
McGoldrick's specialty is distressed investing, though Mt. Kellett was billed as both a private equity and hedge fund-styled group. He and other ex-Goldman colleagues initially aimed to raise about $5 billion for Mt. Kellett with an investment focus in Asia, particularly Greater China.
The firm originally hired around 50 people, but is scaling back, according to a corporate recruiter in charge of placing financial executives.
By last June, the firm had raised around $2.5 billion, Reuters reported, a lower-than-expected target due in part to the lingering financial crisis. With less money in the fund, the firm needed fewer people, said the recruiter.
Brad Landes, the firm's managing director and deputy head of Asia, didn't respond to an email and a call by Reuters seeking comment. McGoldrick could not be reached for comment.
A TOUGH START
According to a company filing obtained by Reuters, Mt. Kellett formed in April 2008. One of the co-founders was Jason Maynard, a former Goldman partner and head of Asia Special Situations Group at Goldman.
The firm, named after a mountain in Hong Kong, also hired Andrew Wise, former head of Morgan Stanley's principal investments in Asia.
Earlier this month, Zhu Jianyi, head of Greater China for Mt. Kellett, resigned for personal reasons, according to a senior Asia executive at an investment firm who is close to Zhu but did not want to be named in this article.
Zhu, a veteran Chinese banker who worked for Deutsche Bank and Goldman Sachs in Asia before joining Mt. Kellett, is currently on vacation, the source told Reuters.
Zhu's exit came after Blake Hutcheson, a co-founder of Mt. Kellett, who ran its distressed real estate investing, resigned late last year to join the Ontario Municipal Employees Retirement System (OMERS), according to a veteran hedge fund manager based in Hong Kong. Canadian media also reported Hutcheson's hiring.
At least 10 investment professionals, including Zhu, have resigned or been let go from Mt. Kellett's 30-person office in Hong Kong in recent months, said two of the sources, who declined to be named as they are not authorized to speak to the media.
Mt. Kellett came close to sealing traditional private equity deals in China, according to Hong Kong-based investment banking sources, but was ultimately left empty-handed.
Like private equity peers, the firm found that valuations in China remained high despite the financial crisis.
"It's too early to say whether it's right, but apparently Mt. Kellett is losing interest in private equity deals in China," said one of the banking sources.
Mt. Kellett is now focusing more on hedge fund-like investing and is eyeing distressed U.S. real estate assets, the sources said, where it may come up against China Investment Corp, the $300 billion sovereign fund, which is also looking at that market.
"Mark McGoldrick is definitely a big name on Wall Street, but not really in China," said one of the sources.