NEW YORK – Several months after resigning as White House Chief of Staff, Erskine Bowles has joined Forstmann Little & Co. as a partner and has re-joined Carousel Capital, the firm he formed in 1996.
Mr. Bowles said he has no plans to return to life in politics, dispelling rumors that he might run for governor in his home state of North Carolina.
“I never envisioned myself as a politician,” he said. “I think you can assume I’ll be in public service; I’ll find some things that interest me and are good for the community.”
Mr. Bowles was Chief of Staff from November 1996 to November 1998. Before his stint at the White House, he helped create Carousel Capital, a buyout firm that focuses on middle- market companies in the Southeastern United States.
Mr. Bowles now plans to divide his time between Forstmann Little and Carousel. Forstmann Little will source smaller deals to Carousel, a new partnership that involved Forstmann Little committing $50 million to Carousel, with some of that capital coming from its $3.2 billion Forstmann Little VI, L.P. Forstmann Little will charge its L.P.s management fees only once for that investment, a spokesperson from Forstmann Little said.
Carousel raised the $183 million Carousel Capital, L.P. in 1996 and the group has invested 70% of that fund, Mr. Bowles said. Carousel will shortly launch a new vehicle with a target between $250 million and $300 million.
Mr. Bowles said he expects a smooth return to private equity, even at Forstmann Little where he is new to the general partnership.
Forstmann Little has given Mr. Bowles a “significant equity stake,” which the firm declined to reveal. Forstmann Little, despite its fund size, has only seven partners.
“I believe that everyone feels it was worthwhile to change the size of the pieces of the pie, because we can increase the size of the pie,” said Mr. Bowles, who believes he can find deals that are hard to locate based on his experience in Washington and as chairman and chief executive at Bowles Hollowell Conner & Co. While at the investment bank from 1975 to 1993, Mr. Bowles worked with Forstmann Little on some of its first buyouts. He then became administrator of the U.S. Small Business Administration (SBA) and Deputy Chief of Staff at the White House, before founding Carousel.
Sources who have worked with Mr. Bowles think he can help Forstmann Little in organization as well as in finding deals.
“He’s such a detail-oriented guy,” said Brian Bailey, a vice president at The Carlyle Group who worked with Mr. Bowles at the SBA and in the White House. “His skill sets make him perfect to work with portfolio companies.”
“I think the real issue is he will eventually work on companies dealing with government issues, and people will throw rocks at him,” said Todd Berman, who manages Chartwell Investments, a firm that touts former White House adviser George Stephanopoulos as a board member. “I’m sure he will be very, very careful and if anyone can handle it, he can.”
Forstmann Little also announced plans to add former House Speaker Newt Gingrich as a board member. Forstmann’s board already includes former government heavyweights such as Henry Kissinger, Colin Powell, Donald Rumsfeld and George Schultz. -J.K.