Frontline – June 2007

FRONTLINE 2007-06-01 Staff Writer <b>JPMorgan launches fund services in the UK</b><br />JPMorgan Worldwide Security Services has launched JPMorgan Private Equity Fund Services in the UK to expand the business in Europe and the Middle East, offering fund administration and portfolio administ

JPMorgan launches fund services in the UK
JPMorgan Worldwide Security Services has launched JPMorgan Private Equity Fund Services in the UK to expand the business in Europe and the Middle East, offering fund administration and portfolio administration to GPs and LPs in both geographies. JPMorgan named Huw Jones the head of the new London of-fice. He joins the firm after having most recently served as CFO of a UK-based biotechnology venture capital firm. In addition to leading the London office, Jones will provide fund administration services to private equity firms in the region. Robert Caporale, CEO of JPMorgan Private Equity Fund Services, said in a statement, ?Expanding the team in Europe is very timely given the recent focus in the region on increased disclosure and professional management of private equity firms. Bringing Huw onboard will enable us to support the administrative needs of European private equity sponsors and investors.?

Aon sets up turnaround and restructuring practice
Aon Corporation, a Chicago-headquartered provider of risk management services, insurance and consulting services, has created a new business organization ?the Turnaround and Restructuring Practice (TARP) to service companies in turnaround situations. TARP defines ?turnaround? to include financial and operational restructuring, which may or may not include the filing for bankruptcy. ?Companies in turnaround are largely abandoned by the brokerage and agency community. This is ironic given that it is a time of great client need? Our objective is to build a stable risk management platform in support of the long-term recovery and success of our clients,? Michael Toner, principal of Aon’s brokerage subsidiary, Aon Risk Services Americas and CEO of TARP, said in a statement. The TARP practice, which will be a national US practice based in Boston, will initially offer property and casualty-oriented services. The company plans to expand its offering into pension, employee retention, executive compensation and international products and services.

Mid-market due diligence inadequate, finds survey
According to a survey by commissioned by JH Cohn, a US accounting and consulting firm, and conducted in conjunction with the third annual Due Diligence Symposium, 35 percent of middle-market executives surveyed in the US Northeast believe that current M&A due diligence processes are inadequate. More than three quarters of respondents believe that the source of poor due diligence is the flood of private equity funds into the market. This problem is compounded by the limited number of quality companies in the market. The study also reveals that almost two-thirds of executives believe that poor due diligence is to blame for the fact that 78 percent of M&A deals fall apart within three years. Among the industries that executives believe are most severely impacted are the financial services, software and technology sectors. Executives believe that there is too much focus on financial modeling, sales forecasting, fi-nancial performance and valuation, but not enough on tangible and intangible assets, tax planning strategy and management assessment.

Citi and Deutsche cross-poach for private equity
In a round of senior executive level hirings, Citi has hired Christopher Gammons to be a managing director focused on covering private equity firms in Asia. Gammons joins from Deutsche Bank, where he was a managing director for debt products and head of leveraged finance for Asia. At Citi, he will report to Chris Laskowski, head of Asia financial entrepreneurs group. Laskowski had reportedly said that he was planning to double his team this year; his team had advised The Carlyle Group and KKR in Asia. Deutsche Bank recently hired eight investment bankers and equity market specialists in Asia, including Gordon Paterson, as Asia head of M&A excluding Japan, from Citigroup. Also joining Deutsche Bank is Angus Barker, as head of the financial sponsor group in Asia Pacific; Barker was formerly head of UBS’ financial sponsor group which advises and finances buyout firms. Other new Deutsche Bank hires are William Choi as head of Korea and Villard Zhou in China, both from JPMorgan; Jason Bahnsen as head of metals and mining from Macquarie; and Sun Kwan from Morgan Stanley, Steven Yoo from JPMorgan and Lawrence Lau from Credit Suisse, all in Asia equity capital markets.

Calyon Credit Agricole hires seven for UK financial sponsors group
Calyon Credit Agricole CIB, the investment banking arm of French financial institution Credit Agricole Group, has recruited seven professionals for its UK financial sponsors group, all from Bank of Ireland. The group, which is headed by Rob Bonfield, provides leveraged finance, advisory and structured products services. The new hires are: Grant Gardner as managing director, from Bank of Ireland where he was head of UK acquisition finance. Gardner has 19 years of experience in the buyout market and previously held senior roles at Bank of Scotland and Société Générale. Allan Clawson and Nathan Hawkes have both joined as executive directors, Nick Bellis as a director, Charles Bowden as an assistant director and Lucy Morley as an associate. Regis Monfront, UK senior country officer at Calyon, said in a statement: ?Financial sponsor coverage plays to our strengths and is an important driver for a number of our activities, including leveraged finance, securitization, high yield and real estate. We are very pleased with the high caliber of the new team members, and we will continue to build on their strengths by making further hires in the coming months.?

Fulcrum names director of Canadian operations
Fulcrum Limited, a global administrator for the alternative asset management industry, has appointed Chris Mulhern as a managing director, Canada. As part of Fulcrum’s global executive management team, Mulhern will have overall responsibility for the management, production and delivery of fund administration services to the firm’s hedge fund clients. He will be in charge of overall management and supervision of the Canadian office and operations, including capacity planning and recruitment. Mulhern joins the firm from Citco Fund Services, where he served as managing director of the Toronto office, overseeing 480 staff. ?Chris will deepen the management of Fulcrum’s global operations as he brings a wealth of experience and knowledge gained from his ten years with Citco Fund Services in a series of senior management roles,? Glen Henderson, CEO of Fulcrum, said in a statement. Operating under the aegis of Fulcrum Fund Administration Ltd, the Canadian division recently expanded to a new larger building that will ultimately house 100 staff, mostly devoted to client services.

BISYS AIS brings on Li in Hong Kong
BISYS Alternative Investment Services, a provider of administrative, accounting and tax services for the private equity, hedge fund and fund of fund industries, has hired Michael Li in its Hong Kong office. Li, who joins as a director, will be responsible for managing the day to day private equity operations, interfacing with Asia-based clients and overseeing the Hong Kong service teams. Li will report to Joseph Patellaro, executive vice president of BISYS Private Equity Services and work closely with Glenn Kennedy, managing director, BISYS Alternative Investment Services Asia. ?We have seen tremendous growth since the opening of our Hong Kong office in December. Asia has incredible opportunities across the alternative investment asset class, and we are excited to have Michael on board dedicated specifically to private equity,? Kennedy said, in a statement. Before joining BISYS, Li worked for Deloitte & Touche and Arthur Andersen in San Francisco, where he focused on private equity and venture capital clients.

Hodge/ Niederer/ Cariani appoints partner specializing in CleanTech
San Francisco-based executive search firm Hodge/ Niederer/ Cariani has named Todd Greenhaugh as a partner to lead the CleanTech and private equity backed industrial practices. Greenhaugh joins from TSG-LLC, where he was founder and president of a retained search firm that recruited leadership for private equity and CleanTech companies. He has a total of 22 years experience in the industrial sector, with 17 of those years in search. His past clients include Apple Computer, Autodesk, ChemConnect, CHEP, Dow, Eastman, Rhone Capital Group’s portfolio companies and Victrex. ?Todd has amazing depth in these sectors, both of which are poised for incredible growth. His knowledge and experience in the industrial and private equity worlds intersect at the nexus of CleanTech and will greatly benefit from the firm’s growth plans,? Jeffrey Hodge, president of Hodge/ Niederer/ Cariani, said in a statement.

OC&C appoints Rzesnitzek as partner in London
Global strategy consulting company OC&C Strategy Consultants has recruited Michael Rzesnitzek as a partner in its London office. Rzesnitzek, who joins the firm on October 1 2007, will provide counsel for the firm’s international private equity clients and work with the firm’s technology, media and telecommunications team in Europe. Rzesnitzek, who is 41 years old, joins from the Financial Times Group in London, where is he managing director for the United Kingdom, Europe, Middle East and Africa, and is a member of the international management board. Before joining the Financial Times Group full time, Rzesnitzek was founder and managing director of the Financial Times Deutschland, a joint venture between Gruner + Jahr and Pearson (Financial Times) for six years. Rzesnitzek has a business degree from WHU in Koblenz and began his professional career at publishing house Gruner + Jahr, where he had served in various management functions, including as director for business development in the firm’s newspaper department.

CFO turnover decreased 32 percent in 2006, says study
According to a study by Russell Reynolds Associates, a global executive search and assessment firm, turnover among Fortune 500 chief financial officers decreased 32 percent in 2006, compared with a 19 percent increase in 2005. The results were affected largely by a decline in the rate of promotions, by 68 percent. The study, the firm’s third annual Financial Officers’ Turnover Study, reported that CFO resignations increased by 41 percent from 2005. Only 13 percent of Fortune 500 companies changed CFOs in 2006, compared with 19 percent in 2005, 16 percent in 2004 and 13 percent in 2003. One of the leading reasons for this turnover is a change in responsibilities. Another factor contribution to turnover is the increased activity of the major private equity firms. ?Private equity firms often appoint CFOs who they know, trust and who have experience turning companies around at new portfolio companies,? said Chris Langhoff, a member of Russell Reynolds’ financial officers practice. ?Thus, we expect to see an increase in turnover, especially in private equity-backed companies, in 2007.?

16 UK ABLs join forces to promote their industry
A group of sixteen financial institutions operating in the UK have joined forces to publicize the value and strength of the UK’s asset based lending (ABL) community by touting their £1 billion funding capability for deals in the UK and Europe. Chaired by Ted Ettershank of Lloyds TSB Commercial Finance and Paul Hancock of JPMorgan, the group grew out of the increased usage of ABLs by private equity and larger corporates executing multicurrency cross border transactions for buyouts and acquisitions. Hancock explains, ?ABL genuinely represents a new form of debt capital when compared to traditional cashflow debt. It appeals for a variety of reasons but in particular for the fact that for some businesses it can provide a higher level of debt, that often much of the debt is nonamortizing and typically there are fewer financial covenants.? ABL members include Bank of America, Barclays, Burdale Financial, Davenham, Eurofactor, Five Arrows, Fortis, GE, GMAC CF, HSBC, JP Morgan, KBC Business Capital, Landsbanki, Lloyds TSB, RBS and Venture Finance.