05/13/2009

Ex-Marsh Pros Staging Parallel Campaigns

Two independently run buyout firms whose histories involve Marsh & McLennan are pitching offerings of funds designed to invest in financial-services companies.

Aquiline Capital and Stone Point Capital began discussing the vehicles with prospective limited partners in the past few weeks. Aquiline hopes to raise $2 billion, while Stone Point is aiming for at least $2.25 billion.

Aquiline's offering is the second under its Aquiline Financial Services Fund banner. The New York operation's debut fund held its final close in 2006 with $1.1 billion. Stone Point, meanwhile, is on its fifth entry in its Trident Fund series. It was last in the market about two years ago, raising $2.25 billion.

The two firms have a somewhat intertwined past and similar investment strategies, which means they could end up competing for limited partners.

Stone Point, of Greenwich, Conn., was owned by Marsh until 2005. At that point, it spun off via a management buyout. Aquiline was started around the same time by Jeffrey Greenberg - a private equity specialist who resigned as Marsh's chairman and chief executive the prior year amid accusations by then-New York State attorney general Eliot Spitzer that the company rigged bids for insurance contracts.

Greenberg, who was never charged in the matter, is the son of former AIG chairman Maurice "Hank" Greenberg. He was joined at Aquiline by co-founder Matthew Grayson, who had earlier helped start Venturion Capital of New York.

Like the 15-year-old Stone Point, Aquiline invests in financial-services companies, including insurers and banks. Most recently, Aquiline supplied a growth-equity infusion to hedge fund firm HedgeServ Holding.

Aquiline is viewed as wielding more investment power than its equity totals might suggest, as it often co-invests alongside other firms. Some of those deals are carried out in tandem with limited partners. They include financial-services industry players, such as a former Lehman Brothers unit. London placement agent MVision is helping to market the Aquiline vehicle.

As for Stone Point, the firm's name has been in the news lately due to a conflict-of-interest issue involving chairman Stephen Friedman. Friedman, who was also chairman of the Federal Reserve Bank of New York, had to resign from that post last week after a flap involving his ownership of shares in Goldman Sachs - which falls under the central bank's jurisdiction. However, indications are that the situation won't interfere with Stone Point's marketing campaign.