DDJ Capital Management staffers buy 19% stake
By Rick Baert | March 15, 2013 2:04 pm
DDJ Capital Management sold equity stakes in the firm to 13 of its senior professionals. The sale price was not disclosed.
The stakes constitute 19% of shares in the high-yield debt and distressed strategies money manager, according to David Breazzano, DDJ's co-founder, president and chief investment officer.
“I'm not stepping down,” Mr. Breazzano said in a telephone interview. “Direct ownership is important to retaining employees and attracting new talent.”
Among the employees who bought a stake in the firm were Jay Russell, CFO, and Joshua McCarthy, general counsel and chief compliance officer. The rest were a “mix” of investment professionals, and client service and back-office employees, Mr. Breazzano said. The offer was voluntary, he added, and all 13 employees accepted the offer.
A 10% share of the firm sold to the 13 employees had been set aside by Mr. Breazzano several years ago; he technically controlled the shares but the employees received the shares' distribution. Those shares were part of the 19% stake sold to employees. “It was a tax-efficient way of getting phantom shares to key employees,” he said. As time passed, “we thought it was a better incentive if they actually owned the shares outright,” Mr. Breazzano said.
A portion of the shares sold to the employees came from Ted Wagenknecht, managing director, who is spinning off DDJ Value Partners, a $5 million high-net-worth hedge fund DDJ incubated, into a separate firm. Mr. Breazzano said the remaining shares come from “reshuffling” the equity stakes of other shareholders.
Mr. Breazzano remains the largest equity holder in the firm, with Anthony Ranaldi, executive vice president and portfolio manager, remains DDJ's second-largest equity owner. Mr. Breazzano wouldn't detail how much he and Mr. Ranaldi still hold in the firm.
DDJ manages more than $5.4 billion in assets for institutional investors, of which about 45% is managed for non-U.S. clients.