| CHARLOTTE, N.C., April 11
CHARLOTTE, N.C., April 11 A private equity firm
spun off from Bank of America Corp in 2010 has raised
its first fund, allowing it to continue making investments in
mid-sized companies as the No. 2 U.S. bank pulls back from the
Ridgemont Equity Partners executives told Reuters that the
firm received total commitments of $735 million from
institutional investors in the United States, Europe and Asia.
They include AlpInvest Partners Inc and the State of Wisconsin
Investment Board, but not Bank of America.
Charlotte, North Carolina-based Ridgemont raised the capital
at a time when dollars are scarce for first-time funds. Only 28
reached a final close in the first quarter, the lowest number in
any quarter from 2008 to 2013, according to Preqin, which tracks
private equity investments.
The new funds accounted for just 6 percent of the $67
billion raised by all funds during the period, compared with 20
percent at the peak.
"It's almost always challenging for first-time funds, and
then you add in a tough fund-raising market in general," said
Travis Hain, who is on Ridgemont's executive committee with
Walker Poole and Trey Sheridan. "But if you have the right
story, you'll find support."
Ridgemont is an unusual case because the firm's principals
have been making investments together since 1993, injecting more
than $3 billion into 115 companies. Before the spinoff, the firm
was known as Banc of America Capital Investors and received its
seed money from the bank.
Bank of America has been winding down its private equity
business as Chief Executive Brian Moynihan looks to streamline
the company and follow new rules. The U.S. Dodd-Frank financial
reform law limits much capital banks can invest in private
Bank of America sold a $1.9 billion portfolio to insurer AXA
SA's private equity arm in 2010. The bank had $1
billion in private equity investments at the end of the fourth
quarter, down from $5.7 billion at the beginning of 2010.
Bank of America's goal is to sell its investments over time
as the company focuses on its core businesses, spokesman Jerry
Ridgemont still manages undisclosed private equity
investments for the bank, but they are in "run-off" mode, Hain
Being independent has advantages for Ridgemont, Hain said.
The firm is not part of a larger bureaucracy and does not face
the same regulatory restrictions as a bank. It also has a more
focused investment strategy, sticking to mid-sized companies in
four sectors ranging from energy to telecommunications, he said.
So far, the firm, which has 27 employees, has committed
about half of its new fund to investments in nine companies.
This month, the bank closed an investment in a software and
marketing company called Simpleview Inc. Ridgemont's investments
typically range from $25 million to $75 million.
AlpInvest partner Chris Perriello said the investor started
building a relationship with the Ridgemont executives before
they left the bank and as they were taking steps to become
independent. "We felt they had a high-quality team, a strong
record," he said.
Officials at the Wisconsin investment board were not
immediately available for comment.
Not every bank is backing away from private equity
investments. Wells Fargo & Co has said it can still make
investments through two funds that are subsidiaries
. Goldman Sachs Group Inc, meanwhile, is
trying to do private equity deals alongside investors that keep
their funds in separately managed accounts.