Regional champions

Fund of funds manager Fort Washington Capital Partners Group is developing an additional dimension to its business: advising state investment councils on venture programs. By Judy Kuan

Up until three years ago, Cincinnati, Ohio-based Fort Washington Capital Partners Group managed a fairly standard fund of funds operation. But in the aftermath of the tech bubble, FW Capital began dabbling in regional funds of funds and advising state-sponsored investment initiatives. In 2001, the firm launched the Tri-State Growth Capital Fund, which targets Ohio, Indiana and Kentucky.

?I'm not sure if we thought of it as a one-off opportunity at the time, but it certainly was different from what we had done previously,? says Stephen Baker, a Cincinnati-based vice president at FW Capital. ?We had to learn how to put a regional fund of funds together, combining co-investments with national managers and working with regional funds. We really pulled off quite a successful fund that came through the support of the community, Fortune 500 companies and major investment institutions here in the greater Cincinnati area. [The Tri-State fund's] success is what has led us to consider doing more regional programs.?

Since then, the region-specific initiatives have grown to become a significant additional dimension of FW Capital's investment activities. Now, a group of eight investment professionals manages FW Capital's three tiers of investment activities – funds of funds, direct co-investment funds, and regional initiatives – and the team expects to continue its expansion in order to support the strategies and directives of its client base for the regional initiatives. To date, one of the investment professionals is based at the firm's Albuquerque, New Mexico office, while the rest are housed in Cincinnati, Ohio along with the rest of Fort Washington Investment Advisors. FW Capital is also in the process of recruiting investment professionals to be located in Columbus, Ohio, and in Utah.

Currently, FW Capital is advising clients in Ohio and New Mexico on state investment programs and is also involved in initiatives involving Kentucky. According to Baker, the firm has signed on to – although not yet announced – a fourth mandate, in addition to considering three other mandates that might or might not come to fruition.

In one of its current regional initiatives, FW Capital is advising the New Mexico State Investment Council on its instate venture capital program, in addition to managing a direct co-investment fund called New Mexico Co-investment Partners LP. FW Capital's involvement with the New Mexico program is fairly new, having launched the program in April 2004.

In Ohio, FW Capital is the managing partner of a joint venture that administrates The Ohio Capital Fund, a tax creditbacked $100 million fund of funds created under the Ohio Venture Capital Authority mandate. FW Capital has also joined forces with The Ohio State University to develop ongoing metrics for comparing the performance of The Ohio Capital Fund with national averages.

FW Capital's activities in Kentucky are twofold. First, Kentucky was one of the three states covered by FW Capital's Tri-State Growth Capital Fund I, LP, a fund of funds launched in 2001. In addition, FW Capital also raised a smaller, $2 million co-investment fund from the University of Kentucky called Kentucky Co-investment Partners, LP.

Fort Washington Capital Partnes group

Head office National funds of funds
420 East Fourth Street Fort Washington Private Equity Investors II, (1999), $245.2M
Cincinnati, OH 45202 Fort Washington Private Equity Investors III, (2000), $141.3M
Fort Washington Private Equity Investors IV, (pending), est.
Other offices: Columbus, Albuquerque, Utah (opening in $100M
2006) Fort Washington Private Equity Investors V, (planned for
2006), est. $100-200M
Key personnel WSL Partners, (2003), $59.8M
Maribeth Rahe, Chief Executive Officer
Nicholas Sargen, Chief Investment Officer Direct co-investment funds
John O'Connor, Managing Director Kentucky Co-Investment Partners, (2004), $2M
Stephen Baker, Vice president (Cincinnati) New Mexico Co-Investment Partners, (2004), $46M
Christopher Baucom, Investment manager (Cincinnati)
Brian Birk, Vice president and regional director (Albu- Customized state/regional funds of funds
querque) Tri-State Growth Capital Fund I, (2001), $40M
Mary Ann Griffin, Investment manager (Cincinnati) The Ohio Capital Fund, (2005), $100m target.