Ex-Bankers Start Fund to Invest in Media
New York Times
By Peter Lattman
September 20, 2010
After months of heated speculation, two prominent Wall Street bankers have raised money for a new private equity fund focused on media deals. They are the latest in a long line of financiers who have left large banks to start boutiques that provide strategic advice and make principal investments.
According to a letter recently sent to its investors, the firm, called the Raine Group, had raised more than $300 million and hopes to close at $500 million. It is being run by Joseph Ravitch, a former partner at Goldman Sachs, and Jeffrey A. Sine, a former senior banker at UBS.
Mr. Ravitch and Mr. Sine have made names for themselves in the media and entertainment business, advising companies on some of the sector’s highest-profile deals. Mr. Ravitch, 48, has worked on transactions including the creation of NBA China and the sale of the Metro-Goldwyn-Mayer movie studio.
Mr. Sine, 54, advised the Sundance Channel on its sale to Rainbow Media, part of Cablevision, and advised Time Warner on its merger with AOL.
The two financiers formed Raine about a year ago and have since spanned the globe to secure backing. Among Raine’s closest ties are to William Morris Endeavor, the influential Hollywood talent agency, which owns a stake in the Raine parent company and has an investment in the private equity vehicle, according to people familiar with the firm. Mr. Ravitch advises the agency and is close friends with Ariel Z. Emanuel, William Morris’s chief executive.
Raine’s investors, according to the letter, are a mix of large sovereign wealth funds, including those run by the Abu Dhabi and Singapore governments. Investors who are also on Raine’s advisory board include moguls like Ted Forstmann, owner of the sports marketing giant IMG Worldwide; Raymond G. Chambers, the private equity pioneer and an owner of the New Jersey Devils hockey team; and Masayoshi Son, founder of SoftBank, the large Japanese media company. Other advisers are Thomas E. Freston, the former chief executive of Viacom, and Marc Andreessen, a founder of Netscape and a board member of Facebook, eBay and Hewlett-Packard.
William Morris will not have a day-to-day role in Raine’s operations, say people familiar with the firm who requested anonymity because the plans were confidential. But Raine’s Los Angeles office will be at the William Morris Endeavor’s Beverly Hills headquarters, in a separate space. (The Raine name is an amalgamation of the founders’ surnames; people close to the firm have suggested that the E stands for Emanuel.)
Raine has already worked on a number of advisory assignments, including counseling Flash Entertainment, owned by Abu Dhabi, on its purchase of a stake in the Ultimate Fighting Championship league. This month, Playboy Enterprises announced that it had retained Raine to review a bid by its founder, Hugh Hefner, to take the company private.
Like many other private equity shops, Raine has focused on the fast-growing Asia region. The firm counts among its advisory board members Li Ruigang, president of the Shanghai Media Group and chairman of the media-focused investment fund sponsored by the Chinese government. Raine has also advised IMG Worldwide on a venture with the Indian conglomerate Reliance Industries to build a professional sports business in India.
The idea behind firms like Raine, which is modeled, in part, on the boutique investment bank Allen & Company, is that their deal-making contacts will give them exclusive access to prospective investments, which could include global comic book brands and new sports leagues.
Byron Trott, another former Goldman Sachs partner, recently set up a similar business in Chicago focused on family-owned and industrial companies.
The Raine fund’s media industry focus is similar to the early formation of the Quadrangle Group a decade ago when Steven Rattner, a leading media banker at Lazard Freres, left the firm with three colleagues to form a private equity operation.
Other boutique firms founded by well-known bankers to provide advice and make investments include Greenhill & Company and Evercore Partners. Both of those firms, now publicly traded, have either been spun off or are winding down their in-house private equity arms to avoid potential conflicts and decrease earnings volatility.