WestAM vet launches new FoF franchise

Considering Donald Phillips’ affinity for venture, it shouldn’t be surprising that the money manager has parted ways from investment group WestAM to launch his own firm, the Chicago-based WP Global Partners. The entrepreneurial spirit apparently never dies.

Wasting no time establishing the franchise, WP Global has already launched three funds of funds, according to regulatory filings, having closed on a total of $150 million (€125 million) spread evenly across three separate private equity, real estate and mezzanine vehicles. The funds are seeking to raise a total of $100 million each.

WP Global also has designs for an approximate $200 million co-investment fund, an energy fund, and either an India-focused fund of funds or an Asian fund of funds that would encompass India, as well as China and Japan.

Joining Phillips at WP Global are fellow WestAM vets Celia Chapman, Greg Oberholtzer, LB Thompson and Sharon Murphy.

The private equity fund of WP Global will primarily target the venture capital and middle-market buyout spaces, two areas that have had their share of detractors. Phillips, however, won’t call himself a contrarian, and instead views these areas as merely the two best opportunities in the market today.

On the venture side, Phillips remains confident in the asset class and believes the market could be as strong as it has ever been. “The sector has historically generated returns in the 18 percent to 20 percent range, and I don’t see that changing,” he told PEO. “And at this point, VCs are telling me that they haven’t seen this quality of deal flow in a long, long time.”

Meanwhile, even as the middle market buyout space has been beset with an ever increasing constituency, Phillips still believes this is the spot that holds the best prospects in the LBO market. He concedes that the market is crowded, but says there is not nearly enough participants to squelch the opportunity.

“You have to figure that 90 percent of the [US] population works for companies with less than 1000 employees. These are institutional grade companies. With respect to deal flow, the amount of opportunities is far in excess of the amount of capital that’s out there,” he said.

The formation of WP Global marks the latest stop for Phillips, who was introduced to private equity in 1983 as the money manager at Ameritech in Chicago. He lasted seven years there, where his charge was to oversee roughly $15 billion of capital, a good portion of which found its way into the fledgling private equity industry. In 1990, he began a real estate venture with Sam Zell that accumulated $2.8 billion in real estate assets and was eventually rolled up into Equity Office Properties.

Next stop for Phillips was to create his own private-equity funds-of-funds group, which in 2000, he sold to Westdeutsche Landesbank, the German parent of WestAM. Phillips served as the CIO of WestAM’s global private equity arm until earlier this, at which point he left the group to form WP Global.