NEW YORK – BT Capital, the private equity investment arm of Bankers Trust Corp., has found a replacement for Douglas Brent, who recently resigned as president to start his own firm.
Charles Ayres in May left his post as managing director at New York and Menlo Park, Calif.-based McCown De Leeuw & Co. to head the direct and co-investment portions of BT Capital’s North American private equity group. Another McCown managing director, Tyler Zachem, who worked with Mr. Ayres for the past six years, also will be making the jump to serve as a managing director in Mr. Ayres’ group.
The move by Messrs. Ayres and Zachem runs contrary to the career paths of several G.P.s who in the last several years have opted to leave in-house investment funds to join or start independent buyout firms. Notwithstanding Mr. Brent, who in May left BT Capital to form his own LBO group (VCJ, June, page 36), last year saw the departure of Frank Sica, former co-head of Morgan Stanley Capital Partners who joined Soros Fund Management’s direct private equity investment program, and Lehman Brothers’ merchant banking lost Managing Directors Steven Berger and Gary Lawrence when they wanted to pursue opportunities outside investment banking.
Mr. Ayres said he was attracted to the top spot at BT Capital, which he assumes in June, because the parent investment bank offered many opportunities through its contacts. “Capital seems not to be the scarce commodity. The scarce commodities are ideas and deal flow,” he said, referring to his belief that BT Alex. Brown’s contacts in investment banking could open the door to deal flow.
McCown Deals With The Loss
Robert Hellman, a McCown De Leeuw managing director, said he and his colleagues were disappointed to lose Messrs. Ayres and Zachem; however, he emphasized that McCown De Leeuw still had six managing directors.
“Our problem, in terms of capacity, has not been on the deal-generation side with partners,” Mr. Hellman said, adding that the firm has a policy of promoting individuals to managing directors only from within. The firm recently added two senior associates and plans this year to add an additional senior associate, as well as three associates.
Sources have speculated that compensation is a motivating factor behind personnel departures from the private equity groups at investment banks, but Mr. Ayres said BT Capital operates as a limited partnership that requires a standard carried interest split, although all of the group’s capital comes from the parent bank.
According to Mr. Zachem, who only last year was promoted to managing director from principal, both he and Mr. Ayres were sorry to leave McCown De Leeuw but could not pass up the opportunity BT Capital had to offer. “We really approached this as an investment, and, with any investment, you want to be in the path of progress, which we really think we are,” he said. “We’ll have access to more capital and the ability to be a strategic partner or co-investor on some deals.”
According to Ted Virtue – president of BT Alex. Brown and head of Bankers Trust’s Americas investment banking operations, under which the private equity group now falls – the appointment of Messrs. Ayres and Zachem is the first step in establishing a more pronounced private equity business. “We are going to have an opportunity to be a much bigger player in the private equity realm. We are going to be as proactive in private equity as we have been in other areas of investment banking,” Mr. Virtue said.
While Messrs. Ayres and Zachem will be working on both direct and co-investments at BT Capital, Mr. Virtue, at least for the time being, will oversee any private equity commitments made by the group.