NEW YORK – Determined to become a leader in the private equity space, investment bank Salomon Smith Barney has expanded its Financial Entrepreneurs Group to 75 people, up from 25 in 1995. The group is responsible for raising capital for private equity investing.
“We fundamentally believe that [private equity] is a class that will continue to grow dramatically,” said Michael Klein, vice-chairman and global head of Salomon’s Financial Entrepreneurs Group and Private Equity Group. Capital raised for new private equity funds at Salomon increased to about $85 billion in 1998 from about $10 billion in 1991, Klein said. Last year’s figures were not available.
To keep up with the growth, Salomon tapped John Barber early last fall to become deputy head of the Financial Entrepreneurs Group. He came over from the bank’s Public Equity Markets Group, where he had been a senior managing director. Salomon then increased that group’s investment team to 12 from eight by hiring Loren Boston, Neil Banta, Tina Courpas and Carolyn Choi out of Deutsche Banc Alex. Brown, to raise funds for the investment bank’s six private equity funds.
Salomon made the hires for two reasons: to satisfy the desire by high-net-worth clients for more private equity investment opportunities and to enhance the bank’s ability to invest its own funds in small- to mid-size technology companies.
Salomon’s closed-ended private equity funds have 10-year life spans, evenly split between investing and exiting. The funds are invested in the United States and abroad in various stages and types of investments. Raised for specific investment managers, the funds take on investment strategies and styles of the fund managers.
Rounding out the enhanced private equity services, Salomon in October solidified a standard consulting retainer with Harvard Business School professors and venture capital experts Josh Lerner and Paul Gompers, to add “credible analysis” to the division’s investment decisions. The professors will prepare quarterly reports and academic articles on private equity for the investment team.
“Bringing on the Harvard professors allows us to give a much enhanced degree of analysis on returns,” Klein said, adding that this level of analysis will prove helpful in attracting new investors to the private equity space.