Archive: February, 2008
Three investors who got rich starting and selling their own Philadelphia-area tech businesses have collected 94 applicants for DreamIt Ventures, a program that will fund and advise ten start-up entrepreneurs this summer on how to get their products to market. They want more. Deadline is March 12. Visit http://www.dreamitventures.com to apply.
Steven D. Welch (who built valve-maker Mitos Technologies Inc. and sold it to Parker Hannifin last year), David Bookspan (sold MarketSpan and its legal data service, now CourtLink, to LexisNexis in 2000), and Michael Levinson (sold PTS Learning Systems to Global Knowledge Network in 1999) have been flogging DreamIt on visits to business and engineering schools from Harvard to Penn State. They say it's an East Coast variation on Silicon Valley's yCombinator program http://ycombinator.com .
"They all have a good team, and a product that either could get to market or looks like it could get funding in three to six months," Levinson said of the applicants so far. "We've gotten plans for mobile advertising platforms, things you can put in a cell phone or BlackBerry. Plans for hyperlocal networking and product promotion. Three or four applications from around the gaming world. And widget plays, plug-in applications that can drop into places like Facebook. People want to know, how do we monetize these?"
Most of the applicants are from local college students or young companies "that want help getting a bump over the hump," said Bookspan. Others are from farther afield: "One we like came in from two guys in Singapore. We've heard from Russia, Europe and Iran."
DreamIt has signed up a Who's Who of Philadelphia private equity investors, accountants and lawyers (Michael Heller of Cozen & O'Connor, Michael Kopelman of Edison Venture Fund, John Loftus of Safeguard Scientifics, among many others) to help sort applications and advise the winners. They'll get cash stipends while honing their business plans, and the program will culminate with "Funding Day" presentations to investors.
Besides would-be entrepreneurs, DreamIt is also looking to hire aspiring "C-level executives" to help develop business strategies during the summer program.
Philadelphia real estate investors Michael C. Forman and David J. Adelman are betting small investors have a growing appetite for private equity. Their partnership, FS2 Capital Partners LLC, filed last week with the Securities and Exchange Commission to raise $1.5 billion for a new fund, Franklin Square Investment Corp., that will pay regular dividends but won’t be listed on any stock market.
“When you cant’t raise money in private equity circles, who do you go to? The public. Though a billion and a half does sound like a lot in today’s investment environment,” says one observer, Philadelphia-based retail invesment consultant Burton J. Greenwald.
“Private equity still has that aura about it -- this is how the rich people invest,” Greenwald added. But he warned that non-traded funds tend to sell at a discount after the initial public offering. And, he asked, “Are small investors really valuable to managers as long-term clients?”
There are signs that small investors have an appetite for more than stocks and bonds. “The market for asset-based alternative investments has expanded dramatically, from around $900 million at the start of 2000, to $11.6 billion last year,” said Keith Allaire, an investment banker at Stanger & Corp. in Shrewsbury, NJ, who worked on the Franklin Square deal.
Most of that growth has been in non-traded Real Estate Investment Trusts, according to Allaire. Franklin Square is an effort to add private equity to broker-dealers’ product pipeline. “The market is basically oriented toward retail investors,” typically people who make at least $70,000 a year and have $70,000 already invested,” said Allaire.
Franklin Square will be managed by GSO Capital Partners of New York, which in January agreed to be acquired by hedge fund and private investment manager Blackstone Group.
“With all the volatility in the stock market, the retail investor needs more places to put his money,” said Adelman.
“What Ira Lubert and Dean Adler are doing in the private fund business for larger investors, we’re going to do in the retail channel,” he added, citing Franklin Square’s Cira Center neighbors, who run the $7 billion-asset Independence Capital investment group.
Hill International, Marlton, said Sheikh Surour bin Mohammed al-Nahyan has given the firm an $8.1 million extension to its two-and-a-half year old, $3.2 million contract to manage construction at his $681 million Etihad Towers project in Abu Dhabi, United Arab Emirates.
Al-Nahyan, a member of the oil-rich Persian Gulf nation’s ruling family, owns the towers, along with the nearby Beach Rotana Hotel and the Abu Dhabi Mall, said Hill spokesman John Paolin.
Hill’s business in Arabic-speaking countries has grown rapidly under Raouf S. Ghali, head of its Project Management Group (International), and other locally-based executives during the recent oil boom.
Vincent Lowry, financial adviser to
“It was Vince’s idea,” said Sean O’Hara, president of month-old RevenueShares Investor Services LLC, Paoli, which last week rolled out three new funds that mimic S&P benchmarks but are weighted to rank index members by corporate revenues. Revenues trump the more usual measure, stock-market capitalization, which skew indexes toward past winners instead of future gains, according to Lowry.
Lowry is chairman of the funds’ investment adviser, VTL Associates LLC. The funds include RevenueShares Large Cap (NYSE: RWL), tied to major S&P 500 companies; RevenueShares Mid Cap Fund (NYSE:RWK), based to the S&P 400; and RevenueShares Small Cap Fund (NWSE:RWJ), which shadows the S&P 600.
Lowry, a 20-year veteran of Citigroup and its SmithBarney affiliate before he started VTL in 2004, said he’s been helping develop investment products, including some that his government clients use, alongside his consulting work since the early 1990s.
For example, the Board of City Trusts, which operates Girard College and Wills Eye Hospital from its $1 billion investment portfolio, had $38 million invested in stock-index funds that Lowry says he set up through Valley Forge Trust Co. as of last year.
How does he keep his interests separate from his clients? ”I don’t take a fee from consulting clients for doing this,” Lowry said. “The key, in the eyes of your clients and the SEC, is how you manage potential conflicts.” He said he’ll keep his current consulting clients, but won’t solicit others, now that he’s in charge at VTL.
O’Hara, a former divisional manager at investment wholesaler Planco LLC/The Hartford, said his new firm charges yearly fees and costs totaling 0.49 percent of assets under management, though it’s lower for individually-managed institutional accounts. Rivals range from index-investment giant Vanguard Group of Malvern to Pasadena-based Research Affiliates LLC, started by Lowry’s fellow Citi alumnus and index-fund theorist Robert Arnott.
Under a previous name, Pacer Financial, RevenueShares has picked up $1.4 billion in client investments over the past two years, O’Hara said. Clients include SEPTA, the
Jeff Garwood, who runs General Electric's Water & Process Technologies from its world headquarters in Trevose, flew to over the weekend to join President Abdelazia Bouteflika in opening GE's new $250 million desalinization plant at Al Hamma, near the capital.
The plant, equipped with massive sand filters, chemically treated membranes, high-pressure pumps, and electric turbines run by recycled brine, is financed by $200 million from the U.S.-backed Overseas Private Investment Co.
On his way to
Portico Systems, a Blue Bell firm that makes network management software for Horizon Blue Cross of New Jersey and other Blue Cross health plans, has received $7.7 million in new financing.
That's $4.9 million from Edison Venture Fund, Lawrenceville, and $2.8 million from Safeguard Scientifics, Wayne). Edison partner Doug Petillo sits on Portico’s board, and Edison director of analysis Orlando Mendoza ran the firm’s due diligence, said Edison spokeswoman Tricia Bradley. Portico CEO Ned Moore said in a statement that
The nation’s biggest banks will collect a windfall from Visa Inc.’s initial public offering later this year. (See story here). JPMorgan Chase & Co. expects to sell stock in Visa worth at least $1.2 billion during and soon after the sale, San Francisco-based Visa said in a public filing with the Securities and Exchange Commission today. Bank of America Corp. plans to sell another $660 million.
BofA and JPMorgan Chase are the top two credit card issuers, according to the Nilson Report, of
The Visa sale could raise $19 billion, making it the biggest intial public offering in the history of the markets, accrording to Bloomberg News.
Visa hopes to imitate rival MasterCard, whose stock rose sharply after the banks that ran both networks as cooperatives reorganized MasterCard as a for-profit company in 2006.
National City Corp.,