Meet the mavericks of the post-crisis buyout world
There has been plenty of talk over how much banks have lost with the influx of new regulations that have forced them to shrink and selloff otherwise profitable businesses. What gets much less publicity are the eventual winners, namely buyout firms that appear happy to take businesses off the hands of capital-sensitive banks.
Bloomberg on Monday published a fascinating article on a buyout group that specializes in just those kinds of deals: Blackstone’s Tactical Opportunities Group, led by New Jersey native David Blitzer.
The 30-person unit has very few boundaries compared to other funds that invest in specific industries. Tac Ops, as it’s called, has invested in anything from oil tankers to Brazilian shopping malls. Their business model is to play in between the cracks of Blackstone’s other funds. Most of the time, that means buying businesses from banks that are forced to unload assets in an effort to meet stringent capital requirements.
“An awful lot of what Tac Ops does was either done by the big banks on their proprietary trading desks or by hedge funds in their illiquid side pockets,” Tony James, Blackstone’s president, told Bloomberg. “Both those sorts of capital have been eliminated and unless they come back, there will be tons of opportunities.”
Indeed there has been. Blitzer’s group has been extremely successful, despite the fact that it has only been around for a short period. Tac Ops is seeing annual returns that touch close to 20%.
Blackstone has grand plans for the group. With $5.6 billion in funds, Tac Ops could soon be playing with nearly three times that. James said the fund could grow to as big as $15 billion.
Eventually, banks will be done selling off assets in bulk, at which time Blackstone acknowledges the group will need to change gears. Until then, it appears to be feeding season.
Here’s the most recent example. Credit Suisse is reportedly considering selling more stake in a new company it set up to help spinoff its fixed income trading business. The firm, Wake USA, just began taking trades last month. Morgan Stanley, meanwhile, has agreed to sell its oil business.
In the latest hiring roundup, Goldman eyes M&A growth, a big name launches his own boutique and a U.S. hedge fund looks to expand in Europe.
Recruitment firm Selby Jennings has issued a series of reports suggesting where hiring is heating up. If you want to pitch yourself for front office finance jobs where your resume will be embraced enthusiastically, try these very specific niches.
If you know how to breakdance, you have an in with hedge fund manager and former Goldman Sachs alum Steve Graham. If you’re not a breakdancer but end up working for him, start stretching before work.
Christopher Swift is replacing Laim McGee as CEO of Hartford Financial Services. Elsewhere, J.P. Morgan has named Rohit Chatterji as its new head of Asian M&A, and Christoph Von Reiche as the new boss of its institutional asset management business in Europe.
Activist investing was just ranked as the most effective strategy in the hedge fund industry. It should come as no surprise then that the number of new activist hedge funds more than doubled last year.
Citi just relaunched its real estate investment banking group in Europe with two new co-heads. Expect more hires to follow.
Connecticut’s Sureview Capital is shutting its doors after three years. The Blackstone-backed hedge fund had issues with fundraising.
Buzz Around the Office
The winning charitable bid for lunch with Warren Buffett came in at $2.16 million, courtesy of Singapore’s Andy Chua, whom we know nothing about. Who knows: he may be looking at it as an investment. Former hedge-fund manager Ted Weschler spent $5 million between two lunches with Buffett and ended up getting a job as one of Berkshire Hathaway’s two investment managers.
Quote of the Day: “It’s a little bit like entering the Navy SEALs. There’s a period—usually about 18 months—of sort of adaptation to this. And some make it and some don’t make it. And so we call it ‘getting to the other side.’” – Ray Dalio on the turnover rates at hedge fund Bridgewater Associates