Taipan returns with war chest
DISCREET, small, well-connected and armed with a war chest of over US$1 billion, Hellman and Friedman Asia can afford to be choosy as to how it defines itself.
''We're not an investment bank dammit,'' snapped Mr Mick Hellman, the usually laid-back managing director of the four-employee firm.
''Investment banks compete in beauty contests against others to sell services. We are long-term investors with great franchises and superior management.'' Luring former Jardines taipan Mr Brian Powers to head the group's Asia operations, the firm opened its offices in the territory on October 23 last year.
''We have known Brian since he was in charge of venture capital at the Ford Foundation in the 1970s and are incredibly impressed with his talents,'' said Mr Hellman.
''He wanted to move back into the investment business and got tired of living in New York, so joining us made a lot of sense as we sought to investigate investment opportunities in the region.'' Hellman and Friedman Asia is the Asia affiliate of San Francisco-based investment firm Hellman and Friedman.
Mr Warren Hellman, former president of Lehmann brothers, and Mr Tully Friedman, former managing director of Saloman Brothers, formed Hellman and Friedman in 1984 after becoming disillusioned with Wall Street's fee-driven culture.
''Warren and Tully saw the investment banking business move to a more transactional footing,'' Mr Hellman said.
''They wanted to return to providing a service based on long-term relationships and find opportunities to invest their own capital.'' Hellman and Friedman's investment portfolio is eclectic, ranging from minority stakes in family controlled companies such as Levi Strauss to restructurings of overleveraged companies, such as John Fairfax Group of Australia.
In 1984, it initiated the Haas family's $1.6 billion leveraged buyout of Levi Strauss and Company.
Since then, among other deals, it has secured BankAmerica's acquisition of Security Pacific and Franklin Resources' (one of America's largest mutual funds operators) US$100 million acquisition of Templeton, Galbraith and Hansberger Ltd, a global investment manger.
It has also contributed US$26.5 million as part of the restructuring of John Fairfax Holdings, the Australian publishing giant.
Hellman and Friedman makes investments of US$25 million or more in each of its portfolio companies.
The limited partners in Hellman and Friedman affiliated funds include the pension plans of AT & T, IBM, and the World Bank, the endowment funds of Stanford and Yale Universities, as well as private investors such as The Ford and Rockefeller Foundation Foundations.
''We look for two things when we invest,'' said Mr Hellman.
''A business franchise, which means good growth prospects and stable or increasing profit margins, and talented management.'' Mr Hellman, who studied Mandarin Chinese at Berkeley, acknowledged that companies in Asia may be unwilling to allow outsiders to play a fundamental role in their business.
''Clearly guangxi [relationships] play an important role as to how business is done in Asia,'' Mr Hellman said.
''Coming in through the right contact will be critical to gain people's trust.'' Mr Hellman was reluctant to be specific as to the type of companies the firm was examining in Asia.
He would only say that Hellman and Friedman did not involve itself in pure real estate deals, or high technology..
Hellman and Friedman Asia has yet to close a deal, preferring to bide its time.
''We are long-term investors, five years or more,'' said Mr Hellman.
''Don't be surprised if a year from now we still haven't found the right investment.''