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Marshinto Stone

THE RECENT SPIN-OUT OF MARSH'S PRIVATE EQUITY DIVISION REQUIRED LP APPROVAL AND PROOF THAT THE GPS WEREN'T DEPENDENT ON THEIR PARENT COMPANY

Beleaguered insurance giantMarsh lastmonth announced the management buyout of the company's private equity division. The firm formerly known as MMC Capital is now called Stone Point Capital and based in Greenwich, Connecticut.

StonePoint's new owners, led by chief executive officer Charles Davis, benefited in their bid for independence from the impression among LPs that the private equity firm didn't really need Marsh that much, after all.

Because the transaction took place during the investment period of the firm's current fund (the $1.1 billion Trident III), it required the approval of most of the limited partners. According to Stephen Hertz and Rebecca Silberstein, partners in the New York office of law firm Debevoise & PlimptonLLP, and advisors to StonePoint, the Trident Fund limiteds ?overwhelmingly? voted for the spinout.

Marsh, currently under scrutiny from the SEC for alleged ?relatedparty transactions?between the parent company and the private equity division, as well as battling a suit brought against it by New York Attorney General Eliot Spitzer, will remain a resource to Stone Point for the remainder of the investment period of Trident III in connection with the fund's pursuit of ?certain investment opportunities.? The parties also agreed to work together if a major dislocation creates an opportunity to create new insurers, as was the case in the Fall of 2001 when several new insurers where created by private equity sponsors.

Throughout most of its history, MMC Capital touted the benefits of being affiliated with a major insurance and financial services firm, particularly in the form of deal flow. Trident focuses mainly on financial services deals as well as insurance investments.

As a major investor, Marsh will continue to send opportunities to Stone Point.?If you're in the insurance space, a relationship with Marsh is beneficial for the evaluation of certain opportunities,? says Hertz. ?Stone Point will maintain its relationships with former colleagues at MMC as well as with other experienced professionals in the industry, which provided comfort to the Trident LPs as they considered the platform's ability to continue to source investment opportunities.?

The independence-minded firm also needed its LPs to know that the valuable deal flow was not tied to Marsh's ownership of the management company. Notes Silberstein:?MMC Capital was not dependent on house deals. This was an independent private equity firm existing within an institutional framework.?

American Capital launches European SICAR
American Capital Strategies, the publicly traded business development company that makes equity and debt investments in private, middle-market companies in the US, has launched a Paris-based affiliate called European Capital. The new firm will invest in buyouts and provide capital to mid-sized European companies, according to a press release. Deal sizes will range between €5 million ($6 million) and €125 million. The company will be organized as a Luxembourg Societe d'Investissement en Capital a Risque (SICAR), a relatively new fund structure touted as being very tax efficient. The European Capital SICAR will be organized under the laws of Guernsey. An affiliate of American Capital, European Capital Financial Services, organized under English laws, will serve as the manager of European Capital. Like American Capital, European Capital will distribute approximately 100 percent of its operating income to shareholders as dividends, according to the release. John Erickson is the chief financial officer and a director of European Capital.

Japan's Advantage names female CEO to supermarket
In a rare appointment of a female to a senior executive position in Japan, private equity firm Advantage Partners, along with its strategic coinvestor, has named Fumiko Hayahi chairwoman and chief executive officer of Daiei. The struggling supermarket chain was acquired this year by Advantage along with strategic buyer Marubeni for ¥62 billion ($575 million;€475 million). Hayashi was formerly the president of BMW Tokyo. Daiei, sold in an auction led by the Industrial Revitalization Corporation of Japan, last year reported a loss of ¥511 billion. Advantage Partners, founded in 1992, a year ago raised ¥46.5 billion for its third buyout fund. According to the International Labor Organization, Japan has among the lowest percentage of women in managerial positions in the world.

Harris Williamsmoves offices
Powerful middle market investment banking firm Harris Williams & Co. has moved its headquarters to a different building in home city Richmond, Virginia, in order to accommodate the firm's growth, the firm announced. The new headquarters are located in Riverside on the James, the newest development in Richmond. Harris Williams settled in its previous location seven years ago. According to the release, Harris Williams, founded by Hiter Harris and Chris Williams, doubles in size every two to three years. The firm also maintains offices in San Francisco and Boston. It has nine managing directors.

Wilber Ross in nanotech joint venture
Wilber Ross, the chairman of distressed investment firm WL Ross& Co., has formed a partnership with MastersCapital Management, a firm based in St. Croix, to make all stages of venture investments in nanotechnology companies. The new venture will be run by Mel Melsheimer, former president of venture capital firm Harris & Harris Group, and Michael Collett, a partner at MastersCapital. Ross and MasterCapital founder Michael Masters will serve as nonvoting members of the nanotech partnership. During his 17 years at Harris & Harris, Melsheimer made 17 nanotech investments, according to a press release. He will operate from an office based in Virginia. MastersCapital specializes in ?public and private domestic and international bonds and equities,?according to the announcement.