NEW YORK – The Bank of New York Co. has formed a new small business investment company that will act as a junior capital partner in private equity transactions.
BNY Capital Partners L.P. will operate primarily as a mezzanine provider to financial sponsors, but the group also will make equity commitments, said Stratton Heath, the managing director who will head the effort. Heath would not disclose the capital base BNY Capital will have, but he said it will call down capital from the parent bank as needed.
“We will evaluate outside money down the road, but the current fund is proprietary,” Heath said.
The bank has participated in the private equity market since the mid-1980s, primarily as a limited partner, and dabbled in direct investing. Heath said the new vehicle formalizes the direct investing effort. Sample L.P. commitments include participation in Kohlberg Kravis Roberts & Co.’s 1996 and 1987 funds and Thayer Equity Investors IV L.P. Heath said a thrust of the new effort will be leveraging relationships with financial sponsors such as these, as well as proprietary deal flow generated through business relationships emanating from other businesses within the bank.
BNY Capital Partners will invest in acquisitions, growth financing and recapitalizations in areas where the bank has experience. These sectors include general manufacturing, distribution, services, media and telecommunications.