NORTHBROOK, Ill. – Four investment professionals who conducted direct private equity investing for the Allstate Insurance Co. have left to raise a $250 million targeted fund.
The move leaves the insurance company without a private equity division. Principals of the new firm, Goense Bounds & Partners, include Managing Directors John Goense and Mark Bounds, as well as Directors Erik Bloom and Corey Golde. The four have worked together for several years and were responsible for the 13 direct private equity investments made by Allstate’s private equity group.
After the foursome’s departure, Allstate opted to discontinue direct private equity investing, and the insurance company will participate only as a fund investor, Goense said. Allstate did not return calls for this article.
Bounds and Goense have worked on 22 transactions together over 11 years, generating an internal rate of return of 65.6% on 14 realized investments.
“It will be great to have the ability to set our own course and operate with a firmly-committed pool of capital,” Goense said. “We have built a good track record and our investment strategy has been very successful, so we wanted to pursue this as an entrepreneurial venture.”
The firm’s fund will focus on middle-market companies in five industries, including building materials, business services, communications, consumer products and specialty manufacturing. The firm will make investments primarily in management buyouts, recapitalizations and industry consolidations.
The fund will target U.S. acquisitions ranging in value from $50 million to $250 million. Approximately $50 million of the fund will be used to purchase 50% of Allstate’s interest in five companies the Goense Bounds partners worked on while they were with the insurance company. They will manage Allstate’s remaining interest in the companies along with their own.
Banc of America Securities is the placement agent for the fund, Goense Bounds & Partners L.P.
Goense and Bounds worked together at Heller Equity Capital Corp., the private equity arm of Heller Financial, from 1988 to 1995. The next year, Allstate recruited Goense to head its private equity group, and Bounds soon joined the team. At the time, Allstate had a $484 million portfolio composed of 82 direct investments and 37 limited partnership fund interests, which were primarily in early-stage venture capital.
Goense said he reset the direction of the group to focus its investing on established companies, primarily as the lead sponsor. Allstate’s team, which was composed mainly of venture capital specialists, subsequently disbanded, leaving Goense and Bounds. Golde joined Allstate in 1994 and Bloom in 1997, and the four made up the private equity group until this year.