The ever-transmogrifying FOIA issue seemed to be stabilizing across private equity land until late last year when, to the horror of scores of private equity GPs, the Ohio Bureau of Workers' Compensation declared it would release to the public detailed information on the valuations of portfolio companies owned by funds with which the Ohio BWC has capital commitments.
Up until that point, all indications were that FOIA had entered a new and relatively safe stage across the US, with states such as California and Texas passing laws to limit openrecord disclosures to fund-level performance information. In fact, no investor has ever released portfolio company information, regarded by most private equity market participants as potentially very damaging to the business interests of the companies and by extension to the funds, fund managers and LPs.
The perception that portfolio company data is now off limits was dashed when the Ohio BWC, responding to a FOIA request from an Ohio newspaper, announced that it would make public a recently compiled report on its private equity portfolio that includes, in addition to fund valuations, the valuations of hundreds of portfolio companies owned by 68 private equity funds.
The report, put together by Ohio consulting firm Ennis Knupp, includes the original valuation of the portfolio companies when acquired by the private equity funds as well as the current valuation of each position.
As the Christmas holiday approached, a spokesperson for Ohio BWC, a worker insurance program, announced that the data would be released on January 6.
General partners and their legal counsel flooded the offices of Ohio BWC with letters of protest. Carl Metzger, a partner in the Boston office of law firm Goodwin Procter, and a representative of some of the GPs affected by the Ohio BWC decision, told sister news service PrivateEquityOnline: ?This is a very serious development in the ongoing FOIA wars. I'm not sure that the public entity involved here appreciates the firestorm that this will create.?
Ultimately, Ohio BWC did exercise some restraint, although it insisted publicly until the last minute that it would release the full report. But on January 6, the Ennis Knupp report was posted on the insurance program's Web site without the portfolio company data in question.
The Ohio BWC has filed a declaratory judgment action in an Ohio court to determine whether it has the right to release the full report and still be in compliance with Ohio trade secret laws. Ohio BWC administrator and chief executive officer William Mabe said in a statement, ?As we seek to restore confidence in how we manage monies, it's important we operate transparently whenever we can. However, I am also concerned about upholding our fiduciary responsibility to the State Insurance Fund. Therefore, I am asking the court to help us balance competing but equally important interests between fully disclosing all background information to the public and taking action that may harm the value of the State Insurance Fund.?
The public would not have been so keenly interested in the private holdings of the Ohio BWC had it not been for ?Coingate? – the title applied to a political scandal still embroiling the state. Last year, it was revealed that the Ohio BWC, which insures public workers, had made an investment in a money-losing rare coin fund operated by a Toledo, Ohio coin dealer named Tom Noe, who just happened to be a friend and golfing buddy of the Republican governor of the state, Bob Taft. Inflaming sentiment was the fact that not all of the coins claimed by the coin fund can be accounted for.
The state government hired Ennis Knupp to get a handle on the other private investments backed by Ohio BWC. Seeking further examples of fiduciary malfeasance, The Columbus Dispatch and other newspapers made FOIA requests to obtain the Ennis Knupp report.
Barring a decision to release the remainder of the report, this Ohio saga might end on a positive note. A recent press release from the insurer notes that its private equity investments have ?appreciated 4.5 percent since inception,? whatever that means. And at the very least, the GPs who continue to seek capital from Ohio BWC, if any, know they won't have to compete against a coin fund for capital.
Black Diamond promotes COO
Black Diamond Capital Management, a Lake Forest, Illinois-based alternative investment firm, has promoted Mounir Nahas to senior managing director and chief operating officer. Nahas joined Black Diamond in 2004 from JP Morgan Partners, where he was a managing director in charge of funds management, products and investments structuring, tax compliance and accounting. Prior to that, he worked at Beacon Group, a private equity firm, managing accounting and tax functions. Nahas began his career at Arthur Andersen. In his role as COO of Black Diamond, Nahas will be responsible for product structuring, liability management, corporate finance and capital market activities. He will be based in Black Diamond's Greenwich, Connecticut office. Black Diamond manages roughly $7 billion in private equity, hedge funds and structured vehicles. It was founded in 1995 by James Zenni and Stephen Deckoff. In a statement, Zenni said Nahas showed ?leadership qualities along with the financial and operational skills that accompany his increased responsibilities.?
Triago appoints French minister
Paris-based private equity secondaries advisor firm Triago has brought on board Alain Madelin as a senior advisor. Madelin is the former French Minister of Finance. As part of his duties, Madelin will ?open doors? at large European institutions that may have private equity partnership interests to sell, according to Triago Group cofounder Antoine Drean. Triago Group was founded in 1992 and today has three lines of business – private equity fundraising, investment advisory and sell-side secondaries advisory. Madelin is enthused about his role at Triago because he views private equity secondaries as cutting edge, said Drean. In a statement, Madelin said: ?My objectives are to help establish new and develop existing relationships internationally with key decision makers at major financial institutions.? Madelin was Minister of Industry in Prime Minister Jacques Chirac's cabinet from 1986 to 1988, a Minister of Business in Prime Minister Édouard Balladur's cabinet from 1993 to 1995, and a Minister of Economy and Finances in Prime Minister Alain Juppé's cabinet.
Millennium Technology hires CFO
New York venture capital firm Millennium Technology has hired Michael Minars as chief financial officer. Minars joins the firm from RRE Ventures, another New York venture capital firm, where he worked for five years. Prior to joining RRE, he was with Marcum & Kliegman, an accounting firm. In a statement, Millennium managing partner Sam Schwerin said the addition of Minars would ?continue our commitment to best practices and to raising the level of financial and operating sophistication in our venture investing business.? Millennium specializes in providing liquidity to investors in early stage technology companies. The firm has done deals with Dell Computer, Bowman Capital, Alliance Capital Management and the bankrupt estate of Exodus Communications. Schwerin co-founded Millennium with Daniel Burstein. Both were restructuring specialists at The Blackstone Group. The addition of Minars brings the count of professionals at Millennium to 10.
3i appoints deputy finance director
3i, a private equity firm traded on the London Stock Exchange, has appointed Julia Wilson to the new position of deputy finance director. Wilson will be responsible for the finance, taxation and treasury functions at the company and will report to group finance director Simon Ball. Wilson, 38, was previously at Cable & Wireless, the listed UK cable firm, where she worked starting in 2000. In 2003, she was named group director of corporate finance. Wilson began her career in 1990 in the tax practice of Arthur Andersen before moving into roles with industrial conglomerates Hanson and Tomkins.