Small bank crafts some big deals

International New York Times
By Michael J. de la Merced
January 5, 2016


The Raine Group may not be as instantly recognizable as Wall Street fixtures like Goldman Sachs and Morgan Stanley.

But the small merchant bank helped Steve Ballmer buy the Los Angeles Clippers, invested in Vice Media and advised the Japanese telecommunications giant SoftBank in its takeover of Sprint.

And in December, the firm claimed yet another big transaction, selling a stake in the parent of the Manchester City soccer team to a group of Chinese investors at a $3 billion valuation, one of the highest in the sport. Raine’s role has not been previously reported.

Over just six years, Raine has become a top player in the world of media and telecommunication deals, helping to both create transactions and, in many cases, take a piece of them as well. And that has earned the firm an enviable list of clients who frequently turn to the bank for their deal-making needs.

‘‘There’s always a fresh idea you’ve never seen,’’ James Murdoch, the chief executive of 21st Century Fox, said in an interview. ‘‘They’re able to bring a lot of creativity to the table.’’

In setting up Raine, the firm’s founders, Joseph Ravitch, 53, and Jeffrey A. Sine, 61, followed in the footsteps of other veteran investment bankers who left established Wall Street banks to strike out on their own. Forgoing the big trading desks that provided so much revenue for their former employers, these bankers — including Kenneth D. Moelis of Moelis & Company, Paul J. Taubman of PJT Partners and Aryeh Bourkoff of LionTree Advisors — instead focused largely on advising on deals.

But Mr. Ravitch and Mr. Sine added a wrinkle to the model by investing in venture capital-type transactions as well as arranging them. The roughly 75 professionals at Raine divide their time about equally between devising potential deals that they could bring to their clients and finding investment opportunities for the firm itself.

That does not always translate to lofty rankings of deal makers. As of Sept. 30, Raine did not make the Thomson Reuters list of the top 50 merger advisers last year. Yet the firm argues that it does not make many pitches for new business, instead working closely with clients on potential transactions.

‘‘We’re not ambulance chasers,’’ Mr. Ravitch said. ‘‘Most of our advisory assignments are repeat business.’’

The firm has suffered some bumps along the way. One of its signature investments, the daily fantasy sports start-up DraftKings, has taken several blows in recent months as state regulators have investigated whether the company and its rival, FanDuel, are operating illegally. A New York appeals court judge has allowed the two to operate in the state until at least Monday.

Few could have foreseen Raine’s birth. For years, its founders were bitter rivals — Mr. Ravitch at Goldman, Mr. Sine at Morgan Stanley and then UBS — who clashed repeatedly during deal negotiations across the world.

The two men differed in more than who signed their paychecks. Mr. Ravitch, who in the interview sat back in a company chair, wearing an open-collared dress shirt, is the well-known liberal son of Richard Ravitch, a prominent Democratic politician who served as lieutenant governor of New York. And Mr. Sine, sporting a blazer, jokingly refers to himself as a Marxist, belying his near-exclusive donations to Republicans.

(Mr. Sine has also forged a second career outside of deal making, producing Broadway shows like ‘‘Beautiful: The Carole King Musical.’’)

Eventually, the two bankers came to agree that they could do business differently than they had done over most of their careers.

‘‘We found common cause because we saw the advisory business as being an idea driver and a relationship driver,’’ Mr. Ravitch said.

Brandon Gardner, 41, the president and chief operating officer of Raine, added in an interview, ‘‘We were purpose-built as a merchant bank from the beginning.’’

By 2009, the two men had pooled their contact lists and formed Raine with the help of a longtime client and friend, the talent agent Ari Emanuel of what is now the WME agency.

Raine’s very name is a portmanteau of ‘‘Ravitch,’’ ‘‘Sine’’ and, reportedly, ‘‘Emanuel.’’

Those connections have opened seemingly innumerable doors ever since. Raine helped Mr. Ballmer buy the Clippers for $2 billion, breaking records for the National Basketball Association in the process. The bank invested in Vice as it ascended into a multimedia empire now valued at over $4 billion.

Raine has also taken stakes in Jimmy Buffett’s Margaritaville and Zumba Fitness, advised WME on its acquisition of the IMG agency, and negotiated the sale of a 20 percent stake in Imax’s China business.

The sale of a stake in City Football Group, the owner of Manchester City, in some ways highlights how Raine operates. Mr. Ravitch had known Li Ruigang, a top Chinese investor in media and entertainment deals, since his days running Goldman’s media deals in Hong Kong when he frequently visited Mr. Li in Shanghai.

After setting up Raine, the banker stayed in touch, offering his insights into investment opportunities for Mr. Li’s current firm, China Media Capital. The Chinese investor forged even closer ties to Raine, with Mr. Li becoming an adviser to the merchant bank.

Then, about three years ago, Mr. Ravitch introduced Mr. Li to Sheikh Mansour bin Zayed al-Nahyan, the Abu Dhabi royal family member who owns City Football, at an annual meeting of Raine’s investors.

In the last six months, Sheikh Mansour and Mr. Li negotiated the sale of a stake in City Football to China Media, with Raine working on behalf of the soccer organization.

What emerged was a huge transaction, with China Media and its partners paying $400 million for a 13 percent stake in City Football. That put the value of City Football — which also owns the New York City FC soccer team and Melbourne City FC in Australia — at $3 billion, making it nearly equal to the better-known Manchester United.

‘‘I think we are looking for more and more deals outside of China, so we need a partner, and we need someone who has expertise and mutual trust with us,’’ Mr. Li said. ‘‘Their expertise can help us.’’