About 18 months after its launching, a group at Bankers Trust New York Corp. created to raise funds for leveraged buyouts is going strong.
The group recently held a first closing for Evercore Capital Offshore Partners LP, the fund run by former Deputy Treasury Secretary Roger C. Altman's Evercore Partners. And it is expecting a second and possibly final close at the end of the third quarter for the fund, which is capped at $500 million.
The work for Evercore and similar funds has earned the group the respect of its competitors. The bank "is beginning to taste some success, which usually takes a while to do," one fund-raiser said.
Fund-raising, which involves raising money for leveraged buyout firms, has historically been dominated by boutiques, such as Benedetto, Gartland and Greene, and investment banks, including Merrill Lynch & Co. and Donaldson Lufkin & Jenrette Securities Corp.
But the business was seen as a natural step for Bankers Trust, which has a history of direct lending to buyout specialists.
Through the fund-raising, the bank collects an initial management fee of about 2% and receives roughly 2 percentage points of the 20% that a general partner in a buyout fund takes from profits.
Bankers Trust is currently raising money for five funds, including Evercore.
Its activities include a $125 million fund for Industrial Growth Partners; a $150 million fund for Dimeling, Schreiber & Park; a $210 million fund for the TCW Group; and a $150 million fund for Communications Equity Associates Inc.
The Industrial Growth and Dimeling funds are near first closings. The TCW and Communications Equity funds are in the marketing stages.
The Bankers Trust group is led by managing director Charles Daugherty, who previously worked in the bank's high-yield bond shop.
He said he would like to see Bankers Trust emerge as one of the top fund-raisers in the business, doing five or six deals and raising about $1 billion a year.
Market participants say that the environment for raising funds for leveraged buyouts is good. Demand for funds is strong, and the number of institutions and investors participating in private equity investing is increasing.
"It's been a terrific year," said one fund-raiser.
But Bankers Trust expects to do more than simply profit from good market conditions. Its group plans to raise money for more difficult, but potentially more lucrative funds, such as first-time funds and funds that will invest in non-U.S. markets.
For example, the bank is now deciding whether to raise money for a Brazilian fund that will invest only in Brazil.
Guarantia, a Brazilian investment bank, is the only group that has done this business in Brazil so far. Bankers Trust is working with an independent group that does not have a track record.
"It's clearly a risk," said Mr. Daugherty. "But I believe that a market with an $800 billion gross domestic product has the capacity" for much more than just one player, he said.
