* Emerging manager replenish market
* Backers value hands-on strategies
* Early funds often boast best returns
By Bernard Vaughan
NEW YORK, Aug 11 (Reuters-BUYOUTS)-Back in the day, buyout
firms such as Kohlberg Kravis Roberts & Co (KKR.N) raised
billions from investors largely on the strength of their
financial and deal-making expertise. Not so today.
When it comes to the next generation of firms, pensions,
endowments and other investors in private equity want to see
not just financial wizardry but hands-on experience running
That's what Buyouts Magazine, published by Thomson Reuters,
determined in its annual assessment of buzz-worthy emerging
managers, loosely defined as buyout firms working on their
first or second pools of capital.
Here's more about five of the most promising such firms:
-- The co-founders of EDG Partners, seeking $150 million
for their first conventional buyout fund, met in 2002. That's
when Mike Gaffney, who led health-care investments for Allied
Capital Corp, partnered with future co-founders Steve Eaton and
Alan Dahl, both health-care executives and investors, in the
acquisition of Housecall Medical Resources Inc, a provider of
home health services and products. EDG Partners invests in
health-care IT and outsourced services.
-- Flexpoint Ford LLC, formed in 2005, is largely rooted in
a relationship between Don Edwards, a former principal with the
private equity firm GTCR Golder Rauner, who specialized in
health-care deals, and Gerald Ford, a billionaire with more
than 30 years experience in the banking industry. The firm,
which has raised more than $1 billion, focuses on deals in the
financial services and health-care sectors.
-- Goode Partners was founded by David Oddi, a former
partner with the private equity firm Saunders Karp & Megrue;
Ron Beegle, a former CFO of Banana Republic; and Joe Ferreira,
who held several executive positions with Avon. Since its
launch in 2005, Goode Partners LLC has made a name for itself
investing in small consumer-focused companies such as
Skullcandy Inc, a maker of colorful audio headphones that
raised $188 million in its initial public offering last month.
The firm raised $225 million for its debut fund, and is trying
to raise $300 million for its sophomore effort.
-- Stripes Group was founded in 2003 by Ken Fox, who
previously co-founded publicly traded investment firm Internet
Capital Group, among several other companies. The other
managing partner is Dan Marriott, who spent 11 years in various
roles with Internet company IAC/InterActiveCorp, including
overseeing the company's M&A activity. The firm, which is
preparing to raise a second fund, targets companies involved in
the Internet, digital media, e-commerce, enterprise software,
information technology and other software-related assets.
-- Sycamore Partners is generating buzz thanks in part to
founder Stefan Kaluzny's background in consumer and retail, and
his leading role in several deals while at Golden Gate Capital,
the firm he left earlier this year to launch Sycamore. Kaluzny
was previously a consultant with Bain & Co, and a co-founder
and CEO of Delray Farms, a Hispanic specialty food company.
Sycamore Partners, which is seeking $500 million to $1.5
billion for its debut fund, recently struck its first deal,
taking a minority stake in women's clothing retailer The
Through August 1 of this year, emerging managers like these
had raised $9.27 billion, or about 24 percent of the $40.6
billion raised by all U.S. buyout shops over the same time
period, according to Thomson Reuters data.
(Buyouts Magazine is a Thomson Reuters publication. Editor: