Six months after Credit Suisse First Boston formally announced plans to restructure their in-house private equity arm, Thompson Dean, the former head of DLJ Merchant Banking, and 15 of his former CSFB colleagues have formed an independent buyout firm, New York-based Avista Capital Partners.
Dean, who formally left the investment bank on July 1st but is still co-chairman of the investment committee for DLJ Funds I, II and III, is co-managing partner and chief executive of Avista. The firm, which recently launched a new website, is currently on the fundraising trail with a reported target of $2 billion (€1.6 billion). Though it has yet to make any investments as a separate entity, Avista is focusing on three industries: energy, healthcare and media.
Joining Dean at the helm of Avista is Steven Webster, co-managing partner and president of the firm and former chairman of DLJ Merchant Banking’s Global Energy Partners. Webster, based in Houston, will lead the firm’s efforts in the energy sector. Deal sourcing and management expertise in the healthcare and media sectors will be provided by the firm’s two industry partners, Larry Pickering and James Finkelstein, respectively. Pickering, who spent three decades in various management positions with Johnson & Johnson, was the chairman of Global Healthcare Partners at DLJ; Finkelstein, the former president and chief executive officer of the National Law Publishing Company, was his counterpart at DLJ Merchant Banking’s Global Media Partners.
Rounding out Avista’s partnership ranks are three former partners at CSFB: David Burgstahler, David Durkin and OhSang Kwon. In addition, Avista’s professional staff includes four principals, four vice presidents and two associates, only one of whom did not work with Dean at CSFB.
The departure of Dean and his team, who constituted approximately a third of CSFB’s merchant banking arm, was the result of the investment bank’s efforts to reduce conflicts of interest with its lucrative private equity clients. These conflicts came to a head when a consortium including CSFB and the private equity arm of JP Morgan Chase outbid another group of buyout firms – The Blackstone Group, Texas Pacific Group and KKR – in the acquisition of Irish pharmaceutical company Warner Chilcott.
Though CSFB had originally announced that it would spin out DLJ Merchant Banking altogether, with Dean at the helm, it later switched course. In March, it was announced that Dean would form an independent firm and the investment bank would maintain its private equity presence, albeit focused on middle-market deals and co-investment opportunities in order to avoid direct competition with its most prominent LBO clients.
While Avista is looking to raise $2 billion for its debut fund, DLJ Merchant Banking is reportedly targeting $1 billion to $2 billion for its latest vehicle, substantially below the $5.3 billion raised for Fund III. Fund IV will receive approximately half its capital from CSFB.
Prior to Dean’s departure, CSFB had already lost a number of high-level buyout professionals, including Lawrence Schloss, global head of the banks’ private equity group, who left to form Diamond Castle Holdings. Other CSFB professionals joining Schloss included Andy Rush, Mike Ranger, David Wittels and Ari Benacerraf. Diamond Castle is looking to raise $1.75 billion.