BOSTON – Great Hill Partners, one of two spinouts from Media/Communications Partners, wrapped its first fund in mid-April on $330 million and added several staffers to help manage the vehicle.
Pat Curran joined the firm as a partner from Warburg Dillon Read, where he headed the investment bank’s information technology services group. Matt Vettel joined Great Hill in February as an associate from the buyout firm GTCR Golder Rauner, L.L.C.
Mr. Curran will focus on business services investments, an area where his skills will complement the telecommunications background of the firm’s managing partners, he said. The augmented team will capitalize on opportunities spawned by the overlap of information technology and telecommunications, Mr. Curran added.
As the firm’s first effort, Great Hill Equity Partners will invest in late-stage deals in durable media companies, information franchises and telecommunications and business services.
Mr. Curran, who had worked at Warburg Dillon for two years, called his college acquaintance, Great Hill co-founder and Managing Partner Chris Gaffney, when he decided to make the transition to private equity from investment banking a few months ago. Mr. Curran said he was drawn to venture capital by the enormous IT investment opportunities, and he liked the idea of joining a later-stage firm that engaged in larger, LBO-type deals.
Unlike Mr. Curran’s previous job, which awarded compensation based on the number of deals he closed, his new role will involve working more closely with fewer companies to reap financial rewards from the eventual success of portfolio companies, Mr. Curran said.
Mr. Vettel sat on the board of four portfolio companies for GTCR Golder Rauner, a spinoff of Golder, Thoma, Cressey, Rauner, and became acquainted with Great Hill because one of his companies was a competitor with one of Great Hill’s companies.
Attracted to Great Hill’s later-stage investment strategy, Mr. Vettel raised the issue of possibly joining the firm.
Mr. Gaffney said his firm rarely hires people it does not know; however, in this case, Great Hill was so impressed with Mr. Vettel that the firm offered him a position.
Prior to working at GTCR Golder Rauner, Mr. Vettel was an associate at the venture capital and buyout firm Bachow & Associates.
Great Hill also recently added Michael Dale as its chief financial officer and John Kenny as an analyst. When the firm split from Media/Communications Partners, Great Hill recruited Mark Evans, who became a principal at the firm, and Matt Murphy, who is an associate.
“We’re looking for a couple other people, but right now, that’s the full house,” Mr. Gaffney said.
M/C Venture Partners, which focuses on earlier-stage communications and information-technology deals, is the other firm that spun out of Media/Communications Partners (VCJ, March, page 21).
Great Hill held a first close on $250 million in February and held rolling closes until it wrapped at its $330 million cap. Limited partners in Great Hill who had invested in previous funds managed by Media/Communications Partners include: Yale University, Williams College, the State of Pennsylvania Employes’ Retirement System, Chase Chemical Investments Inc., First Union Investors Inc., Fleet Growth Resources Inc., INVESCO Private Capital, J.P. Morgan Venture Capital Institutional Investors L.L.C., the Common Fund, Finnova Capital Corp., Sovereign Financial Services, Lucent Technologies Inc. Master Pension Trust and SBC Southwestern Bell Corp., Mr. Gaffney said.
New Great Hill backers include Landmark Primary Partners, the Province of Quebec, BancOne Investment Management, CIBC Capital Corp., the Washington State Investment Board, Pantheon Ventures Inc., Liberty Mutual Insurance Co., The Investment Fund for Foundations, the University of North Carolina at Chapel Hill and Hoffman-LaRoche.
Great Hill Managing Partners Steve Gormley, John Hayes and Mr. Gaffney maintain board seats on 16 portfolio companies from Media/Communications funds. Mr. Gaffney explained that investors were not concerned about previous fund obligations, as they will take as much time away from the new fund as if Media/Communications Partners had remained intact and raised a new fund.
By press time, Great Hill had invested in two deals: a $25 million Internet service provider (ISP) consolidation in the Southeast that created DURO Communications Inc., and Horizon Telecommunications International L.L.C., a Brazilian cable ISP and telephony company.
Horizon will build a plant to provide cable, Internet and ultimately telephony to cities outside of So Paulo after telephone deregulation takes effect in 2001. The company received $65 million in financing, including $21 million from Great Hill and $30 million from two previous Media/Communications Partners’ funds, Mr. Gaffney said.
Mr. Gormley said the firm was working on a roll-up deal at press time, but he declined to provide details.