Bill Gates’s investment firm is joining a private equity venture on terms rarely available from traditional buyout funds.
Cascade Investment, manager of Gates’s personal fortune, billionaire Nathan “Natie” Kirsh, and a family that made its fortune in commodities plan to take stakes in retailers, restaurant chains and consumer-branded companies. They’re partnering with a small team of New York turnaround experts who’ll do the legwork to find and negotiate deals.
The three investors are helping to break the industry mold in two ways: they won’t have to commit any money upfront for transactions and they’ll get to cherry pick deals. It’s part of a broader trend in the private equity industry in which wealthy families are either going their own way on deals or demanding more say for the use of their money.
“Families like to be able to call more shots than a lot of other LPs, especially in the industries they think they know,” said Steven Huttler, a partner at the New York law firm Sadis & Goldberg who specializes in private equity. But deal-makers are “smart enough to know that family office money is the stickiest, strongest and best.”
Cascade’s Investments
The investment group is backing a venture led by Jerry Levin, who spent the 1990s turning around companies for Ronald Perelman, and Stephen Sadove, the former chief executive of the Saks store chain. The firm, called JW Levin Management Partners, is based in New York and will focus on companies with a market cap of about $1 billion, though it may seek smaller enterprises, Levin, 72, said in a telephone interview.
“We are operating people, and they count on us to identify things that, from an operating perspective, have potential,” Levin said. The backers “will look at every deal instead of turning money into a fund.”
Gates and the other investors agreed to back JW Levin when the venture was formed in October 2015. The details on the firm were disclosed last month, when it registered as an investment adviser with the U.S. Securities and Exchange Commission.
Cascade, based in Kirkland, Washington, and run by Michael Larson, oversees almost all of Gates’s fortune, estimated at $89 billion. It holds stakes in several publicly traded companies, including Canadian National Railway Co. and waste manager Republic Services Inc., according to regulatory filings.
Wealthy Families