WILTON, Conn. — Private equity firm DLB Capital plans to have a major impact on the asset management industry, which the new company's executives believe is ripe for infusions of capital.
DLB Capital Corp. is looking to raise up to $1.5 billion for use in the financial services industry, with asset management companies presenting some of the most compelling opportunities for investment, said Douglas Brown, one of the Wilton, Conn.-based firm's founding partners. Mr. Brown, who left his post as vice chairman in Morgan Stanley's investment banking group last May, hooked up with William Shea, the former president and CEO of Conseco Inc., to launch the new venture.
DLB will look at chances to buy established asset management firms, he said. It will also target asset management firms that might need more capital to expand their businesses. The firm also will look at opportunities in the insurance and banking industries, Mr. Brown said.
DLB will also provide capital to individual investment teams that could function as stand-alone asset managers, or it could back management-led buyouts in the money management industry.
"The money management business is populated with a lot of talented people and teams who may not be operating in the most appropriate environment," said Mr. Brown, who has advised on more than $80 billion in deals while at Morgan Stanley, including American International Group's purchases of American General Corp. in 2001 and SunAmerica Inc. in 1998. The deals were valued at $22 billion and $18 billion, respectively.
Mr. Brown pointed out, for example, that the "financial services supermarkets" created in the late 1990s and early 2000 now house a great deal of investment management expertise that "could easily be spun out" to extract more value for both employees and private equity investors.
The firm is now in the early stages of raising money and will be meeting with several large public pension funds as well as several private equity funds of funds interested in investing in DLB's first fund, said Steven Johnson, a partner at DLB who is heading the firm's marketing and investor relations and was executive vice president and head of institutional distribution for Schroder Investment Management North America.
Mr. Johnson said DLB has five deals in the pipeline, two of which are in the asset management industry.
DLB will add to the growing pool of capital now available to money managers. Private equity firms such as Hellman & Friedman LLC, San Francisco, and TA Associates Inc., Boston, have raised billions of dollars and continue to target asset managers for investment.
But there are other new players, including Crestview Partners LLC, the New York-based private equity firm involved in the $300 million buyout of Munder Capital Management from Comerica Inc. in August.
Also, earlier in 2006, three former Putnam Investments executives formed Boston-based Aquiline Capital Management, which is looking to invest in, and form partnerships with, new or emerging asset management firms.
DLB's Messrs. Brown and Johnson said it's too early to discuss any specific information about its potential investors or targets in the asset management space, but Mr. Brown said the firm will initially focus on transactions in the U.S., and then it will target deals in Asia.
While DLB will seek to raise up to $1.5 billion, it intends to make investments ranging from $50 million to $300 million.