Bain Capital

Bain Capital LLC is a Boston-based private equity firm founded in 1984 by partners from the consulting firm Bain & Company. Originally conceived as an early-stage, growth-oriented investment fund, Bain Capital today manages approximately $65 billion in assets, and its strategies include private equity, venture capital, public equity, high-yield assets and mezzanine capital funds.

Firm

The firm includes a large group of investment professionals with consulting or operating experience, and takes an intensive, analytical approach to the investment process. This allows the firm's teams to pursue a wide range of equity investment opportunities, and to conduct extensive diligence, to do a fact-based analysis of the business and competitive industry dynamics, and to identify a winning business model. Thus, Bain Capital turns a profit on floundering corporations by buying them at low cost, stripping away any projects that aren't profiting or that lack potential, and laying off any excess workers.

Bain Capital manages approximately $65 billion in assets, and has founded, acquired, or invested in hundreds of companies including AMC Entertainment, Aspen Education Group, Brookstone, Burger King, Burlington Coat Factory, Domino's Pizza, DoubleClick, D&M Holdings, Guitar Center, Hospital Corporation of America (HCA), Sealy, The Sports Authority, Toys R Us, Unisource, Warner Music Group and The Weather Channel.

In 2011, Bain Capital reported employing around 80 managing directors and approximately 400 professionals, most with previous experience in business or consulting.^[1]

History

Bain Capital was founded in 1984 by Bain & Company partners Mitt Romney, T. Coleman Andrews III, and Eric Kriss. In addition to the four founding partners, the early team included Fraser Bullock, Robert F. White, Joshua Bekenstein, Adam Kirsch, and Geoffrey S. Rehnert. Bain Capital's original $37 million fund was raised entirely from private individuals in mid-1984. Romney led the business during the periods 1984 to 1990 and 1992 to 1999.^[2]

One of the fund's first start-up investments was Staples, Inc., the $15 billion office supply retailer. The funding enabled Staples to expand from one store in 1986 to over 2000 stores in 2011.

In his 2010 book The Buyout of America: How Private Equity Is Destroying Jobs and Killing the American Economy, Josh Kosman described Bain Capital as "notorious for its failure to plow profits back into its businesses," being the first large private-equity firm to derive a large fraction of its revenues from corporate dividends and other distributions. The revenue potential of this strategy, which may "starve" a company of capital,^[3] was increased by a 1970s court ruling that allowed companies to consider the entire fair-market value of the company, instead of only their "hard assets", in determining how much money was available to pay dividends.^[4] In at least some instances, companies acquired by Bain borrowed money in order to increase their dividend payments, ultimately leading to the collapse of what had been financially stable businesses.^[2]

Bain Capital's ownership of American Pad & Paper (Ampad), acquired in 1992 from Mead Corporation for $5 million, is estimated to have generated more than $100 million in revenues for Bain and its investors through advisory fees, sale of stock, and other revenue that resulted from an initial public offering and assumption of other debt. Hundreds of jobs were eliminated by the closing of production facilities before the business was liquidated in bankruptcy in 2001.^[5]

Recent notable investments

Some recent proposed and actual Bain Capital investments include (in reverse chronological order):

• 2010, Oct – Acquires Gymboree for $1.8 Billion USD.^[6]
• 2010, Mar – Wall Street Journal reports that Psychiatric Solutions is in talks to be purchased by Bain.^[7]
• 2010, Mar – Purchases Styron (polystyrene, latex), a division of The Dow Chemical Company, for $1.6 billion.^[8]
• 2009, Jun – Bain Capital announces a deal to acquire a 16% stake in Chinese electronics manufacturer GOME Electrical Appliances for $300 million.
• 2008, Jul – Joins with Thomas H. Lee Partners to purchase Clear Channel Communications.^[9]
• 2008, July – Acquision of D&M Holdings for $442 million. [2]
• 2007, Sep – Joins with the Chinese networking company Huawei Technologies in an attempt to acquire 3Com for $2.2 billion in cash.^[10] However, they were unable to structure the deal to satisfy constraints set by Committee on Foreign Investment in the United States (CFIUS). In March 2008, Bain and Huawei abandoned the transaction.^[11]
• 2007, Jun – Signs an agreement with Guitar Center to purchase the music retailer for $1.9 billion, plus $200 million in debt. The buyout will be for $63 per share, a 26% premium on June 26's closing price. The deal was approved by shareholders on September 18, 2007 and closed October 9, 2007.^[12]
• 2007, Jun – Agrees to acquire HD Supply for $10.3 billion, along with Carlyle Group and Clayton, Dubilier & Rice (with each agreeing to buy a one-third stake in the division). Home Depot sold their wholesale construction supply business to fund a stock repurchase estimated at $40 billion.^[13]
• 2007, Jun – Acquires Bavaria Yachtbau for a price rumored to be about €1.3B Euros.^[14]
• 2007, May – Acquires Edgars Department Stores (Edcon Limited) of Zimbabwe and South Africa.^[15]
• 2006, Aug – Joins the enlarged private equity consortium headed by KKR that agreed to acquire an 80.1% stake in the Semiconductor Division of Royal Philips Electronics. The new company is called NXP Semiconductors.
• 2006, Apr – Acquires Burlington Coat Factory Warehouse Corp., which operates more than 360 retail stores.
• 2005, Jun – Teams up with Haier Group, China's largest appliance maker, and private equity firm Blackstone Group in an attempt to acquire Maytag for over $1 billion. The bid was dropped a month later.
• 2005, Mar – Proposes a $3.5 billion buyout of all 30 teams in the National Hockey League during the league's lockout. The offer was rejected. In June 2005, the company made a revised bid of $4.3 billion for the 30 teams and allow the current owners to maintain a stake in the league. This bid was also rejected.
• 2004, Nov – Purchases the Dollarama chain of dollar stores, based in Montreal, Quebec, Canada and operating stores in the provinces of Eastern Canada for $1.05 billion CAD.
• 2004, Mar – Acquires Brenntag Group from Deutsche Bahn AG (Exited in 2006; sold to BC Partners for $4B).
• 2003, Nov – Invests in Warner Music Group.
• 2003, Aug – Purchases Bombardier Inc.'s recreational products division, along with the Bombardier family and the Caisse de dépôt et placement du Québec, and created Bombardier Recreational Products or BRP. Bain Capital took a 50% interest in the new company.
• 2002, Jul – Acquires Burger King in July in a leveraged buyout with TPG Capital and Goldman Sachs Capital Partners.

Affiliates

Bain Capital's family of funds includes private equity, venture capital, public equity and leveraged debt assets.

• Absolute Return Capital (ARC) is the absolute return affiliate of Bain Capital managing approximately $600 million of capital. ARC manages assets in fixed income, equity, and commodity markets to produce attractive risk-adjusted returns while maintaining low correlation to traditional investments.^[16]

• Bain Capital Private Equity has raised ten funds and invested in more than 200 companies. The private equity activity includes leveraged buyouts and growth capital in a wide variety of industries.^[17]

• Bain Capital (Europe) Limited, an affiliate of Bain Capital, LLC, is dedicated to investment opportunities in the European market. Based in London, with an advisory office in Munich, Bain Capital has a successful European investment track record dating back to 1989.^[18]

• Bain Capital Ventures is the venture capital arm of Bain Capital, focused on seed through late-stage growth equity, investing in business services, consumer, healthcare, internet & mobile, and software companies.^[19]

• Brookside Capital is the public equity affiliate of Bain Capital. Brookside's primary objective is to invest in securities of publicly traded companies that offer opportunities to realize substantial long-term capital appreciation.^[20]

• Sankaty Advisors, the fixed income affiliate of Bain Capital, is one of the nation's leading private managers of high yield debt obligations. With $19.1 billion of committed capital, Sankaty invests in a wide variety of securities, including leveraged loans, high-yield bonds, distressed securities, mezzanine debt, convertible bonds, structured products and equity investments.^[21]

References

External links

• Bain Capital (company website)
• Bain Capital Ventures
• Warner Music Group