Bond-Focused Firm Pursues Alternative Strategies

0

Most of the assets managed by downtown L.A.’s TCW Group Inc. are invested in bonds, but the firm has been working for the past year to build up assets invested in its so-called alternative strategies – private equity, direct lending and distressed debt.

Last week, TCW bought Beverly Hills private equity firm Craton Equity Partners to form TCW/Craton, the fourth alternatives fund TCW has launched in the past year. Financial details of the deal were not disclosed.

Craton invests in clean-technology companies and bills itself as a socially responsible investor. That was part of the attraction for TCW, said Jess Ravich, a managing director who oversees the firm’s alternative investment products.

He said institutional investors are increasingly required to make some socially responsible or “impact” investments. Craton was an attractive buy in part because of the firm’s managing partner, Tom Soto. He has served on U.S. environmental policy posts under Presidents Bill Clinton and Barack Obama.

“Craton sees a lot of deals because of his knowledge base,” Ravich said. “They see the vast majority of deals they want to see because of who they are.”

Craton manages $242 million, a sum that won’t materially affect TCW’s $128 billion in assets under management.

The Craton acquisition and other deals have offset some of the alternative assets TCW lost when two former business units – EIG Global Energy Partners and Crescent Capital Group – spun off in 2011. It also comes at a time when investors have been pulling money out of the company’s core business of bond funds.

But Chief Executive David Lippman said the recent focus on alternatives isn’t a sign that the firm believes demand for bonds is on the wane. Rather, he believes aging baby boomers will feel more comfortable putting their money in alternatives than in stocks.

“Investors are going to be involved in the fixed-income market for a long time,” he said. “The reason we find alternatives to be intriguing is that we feel there’s investor appetite for investments that throw off higher yield and returns than in the equity markets.”

First Foray

El Segundo advisory firm Critical Point Partners helps clients buy businesses. But every now and then, it finds a business that’s a good deal – but its clients aren’t interested.

So the year-old firm, founded by Platinum Equity alumnus Matt Young, has started investing on its own. Critical Point’s new investment arm, CriticalPoint Capital, made its first acquisition last month, purchasing Organized SportsWear.

The Chatsworth company sells custom screen-printed and embroidered clothes, including T-shirts and gym shorts, to more than 1,000 schools, mostly in California. Company founder Rick Johnson was looking to retire, Young said.

The deal closed Sept. 25. Financial terms were not disclosed.

Young said Organized SportsWear is a solid business with good fundamentals and potential for growth. The company does its manufacturing in-house and has about 65 employees.

“They’re a leader in a niche industry, selling to high schools and junior highs,” he said. “We think it’s a great platform to build from.”

Young said he plans to boost sales by bringing in more sales representatives and by adding more in-demand products. He noted that Organized SportsWear has been run well but that the company was slow to offer moisture-wicking T-shirts and other modern performance apparel.


K-Town Raid

Hanmi Financial Corp. last week snatched four bankers away from rival Korean-American bank BBCN Bancorp Inc., in part to beef up Hanmi’s commercial lending business.

Hanmi hired Anthony Kim as chief lending officer, Peter Yang as chief banking officer, and Chris Cho and Jay Kim as senior vice presidents.

Cho and Kim were hired to grow Hanmi’s commercial and industrial loan portfolio, which is relatively small for a bank its size. Like other Korean-American banks, Hanmi has focused less on that type of lending and more on mortgages for commercial properties.

C.G. Kum, Hanmi’s chief executive since June, has said growing the bank’s commercial and industrial portfolio is key, as competition for real estate loans among Korean-American lenders has pushed rates down.

Staff reporter James Rufus Koren can be reached at [email protected] or (323) 549-5225, ext. 225.

No posts to display