Entering the highly-competitive merchant banking arena, Societe Generale USA has hired a former Goldman, Sachs & Co. partner to head its new investments group.
James N. Lane, 45, was a founding member and co-head of Goldman's principal investment area and co-manager of the firm's leveraged finance group. He left Goldman in 1992 and founded his own investment group, Devonwood Capital LLC.
Mr. Lane will be a managing director and head of the fledgling investments group at the New York-based unit of Societe Generale. The French bank's entrance into the U.S. merchant banking business comes at a time when large amounts of capital is chasing a steady flow of deals.
"High liquidity is both the good and bad news for them," said Jay Allen, head of the leveraged buyout group at BankAmerica Corp.
"In the market today, there's an awful lot of capital available for this business," he added. That means that the flow of deals continues at a healthy pace, but the environment for buying properties is "as competitive as it's ever been."
Although Mr. Lane had been courted by other firms and leveraged buyout funds since leaving Goldman, Societe Generale was the first to offer him a position with a investment fund already capitalized.
"The fact that they had $300 million in place was the reason I first pursued it," Mr. Lane said in a telephone interview.
An additional $300 million has already been committed to a collection of private equity funds and LBO firms, including key players such as Kravis Kolhberg Roberts, A.H. Kelso, and Hicks, Muse, Tate & Furst Inc.
Additional funds have also been dedicated to mezzanine and bridge lending, said Curtis R. Welling, senior managing director and head of investment banking for Societe Generale USA. "When you put all those together, we'll have substantially over $1 billion in equity in the merchant banking operations," he said.
In development for over a year, the unit has thus far made two investments totaling $20 million.
Mr. Lane's first order of business at Societe Generale will be to hire up to nine professionals and create new merchant banking guidelines and plans. He plans to focus the group on LBOs, consolidations, leveraged build-ups and later-stage venture capital efforts.