Itmust be the Bain Capital DNA – Salt Lake City-based Sorenson Capital, a year after raising its debut fund, is still adding investment professionals to pursue a ?resource-intensive?strategy, according to a source close to the firm.
One of Sorenson Capital's co-founders is Ron Mika, a former managing director of Bain Capital, the latter known for its relatively staff-intensive approach to investing. The other co-founders of Sorenson Capital reveal a firm strongly oriented towards operating expertise – Richard Lawson is the former president of Found, an e-commerce services provider; Tim Layton is the former president of Medeco Security Locks; and Fraser Bullock is the former chief operating officer of the 2002 Salt Lake Winter Olympics.
To the general public, SorensonCapital is best known for the fifth co-founder – Steve Young, the former star quarterback of the San Francisco 49ers football team. Young is described as a star networker.
Sorenson got its name and $75 million of its debut $250 million fund from the James LeVoy Sorenson family of Utah, which built a fortune through medical devices. Another backer is Robert Gay of Bain Capital.
The firm is already well on its way to establishing itself as a major player in the Western middle market. The firm's Web site lists 17 investmentprofessionals, although the firm declined to specify how many employees it has. A source estimates thatSorensonCapital currently has between 25 percent and 50 percent more staff than is typical for a fund of its size.
To support the intensive due diligence and operating support strategy, SorensonCapital does not rely on its management fee alone. Deal fees, while shared with limited partners, are largely used to support the firm's relatively high expenses.
SorensonCapital currently has two additional offices in Palo Alto, California and Phoenix, Arizona, indicating a determination to be present throughout the so-called Intermountain region, the Southwest as well as maintain a foothold in Silicon Valley.
The growth of Sorenson Capital is being followed throughout the region. A general partner at a Los Angeles-based middle market buyout firm said recently of SorensonCapital:?Those guys are hiring lots and lots of bodies.?
ILPA'speed dates' with GPs
A select 75 general partners were holed up in 75 private rooms at the Sheraton New York last month for a two-day summit organized by the Institutional Limited Partners Association – an event described by one attendee as ?speed-dating.? The event, called the General Partner Summit, included a standard-formatpanel discussion, but also involved one-onone meetings between LPs and GPs in private hotel rooms with a conference table, but no bed.?It's all about marketing to LPs and opening up new relationships,?a source at the conference said. In related news, the ILPA, a trade organization for LPs, lastmonth threw its weight behind private equity reporting guidelines established by the Private Equity Industry Guidelines Group (PEIGG) with an official endorsement. ILPA has previously backed separate guidelines for portfolio valuation from PEIGG.
?Competitive? UK IPOs cause concern
Forget beauty parades – the so-called ?competitive IPO? is where it's at when it comes to handling floatations in London today. Under the practice, first applied in the offering for French directories company Pages Jaunes in 2004, the issuer will not, as is normal practice, formally appoint an underwriter – or underwriters – well in advance of the marketing process getting underway. Instead, the issuer will ask numerous banks to start drumming up interest in the deal and from this group select underwriters at a much later stage. The issuer's decision of who gets the job depends on which banks report back with the best feedback on pricing and demand for the stock. In some cases, the competing banks have been kept in suspense until the day before their respective analysts began to publish research about the issuer. Having been used in a handful of transactions thus far, some of them private equity-backed, the practice is not without its critics. It arguably gives issuers and their backers greater control over the IPO process. However, underwriters trying to win mandates are incentivized to push for the highest possible issue price during the pre-marketing, which may or may not hurt the stock in the aftermarket. In addition, regulators are worried that the practice creates conflicts of interest between the bank's marketers trying to win business and the analysts producing intelligence on the IPO candidate. In November, the Financial Services Authority asked for information about the competitive IPO of Inmarsat, the satellite company, in order to better understand the practice.
Hedge funds increase ?lockup? to skirt SEC
An increasing number of large hedge fund managers are avoiding new SEC registration rules by increasing the ?lockup?period for investors. According to a report in the Wall Street Journal, major hedge funds including SAC Capital Management, Citadel Investment Group and Eton Park Capital Management will prevent investors from withdrawing capital for periods of two years or more. Recently enacted SEC rules require most hedge funds to become Registered Investment Advisors. The commission instituted this rule to better keep track of the hedge fund industry, which has suffered occasional instances of fraud. But the commission drew a line between hedge funds and private equity funds with a two-year illiquidity minimum.?We're aware thatsome hedge-fund advisors are planning to extend their lockup period and we'll evaluate the situation when we have a better picture of the situation in February,? said Robert Plaze, associate director of the SEC's investment-management division, in the report.