Two Madison Dearborn executives with a combined 26 years of experience at the Chicago-based private equity firm are leaving to start a new investment house.
Tim Hurd, a managing director who headed Madison Dearborn’s financial services team, and Edward Magnus, a director who also worked on his team, are starting BlueSpruce Investments LP. It will invest in “public, marketable securities” across multiple asset classes, according to a letter from the firm.
“BlueSpruce Investments has the backing and the support of some of the most prominent and sophisticated families and investors in the United States,” they said.
The two have been involved in Nuveen Investments, which became a Madison Dearborn portolio company in 2007. In light of their leaving, Madison Dearborn Co-Chief Executive Sam Mencoff will join the Nuveen board, Madison Dearborn said in a separate letter to investors.
Vahe Dombalagian, a Madison Dearborn managing director in its financial services team, will become the lead deal partner on the investment and he take over the firm’s financial services investment. Dombalagian recently led Madison Dearborn’s recent investment in EVO Payments, the payment processing company, and was also a lead partner on the firm’s profitable investment in TransUnion.
Madison Dearborn also said the it believes “the most compelling investment opportunities” in financial services are in financial technology, information services, consulting, data/analytics and insurance services, “all of which are areas where we have significant expertise and domain knowledge.”
Madison Dearborn has evaluated more than 50 bank deals since the economic downturn, but hasn’t made any deals in that area of the financial services business.
Before joining Madison Dearborn, Hurd was with Goldman Sachs & Co. He currently serves on the boards CapitalSource Inc., Nuveen Investments Inc., Children’s Memorial Foundation, the Latin School of Chicago, and the endowment and investment committee of the Chicago Symphony Orchestra.
Magnus had been with Donaldson Lufkin & Jenrette in the financial institutions group. He is on the board of directors of EVO Merchant Services and Nuveen Investments, Inc.
Both Hurd and Magnus have bachelor’s from the University of Michigan and master’s in business administration from Harvard.
By Becky Yerak
Allstate Corp. is closing a claims office in Cross Plains, Wis., to “be more efficient,” a spokesman for the Northbrook-based home and auto insurer confirmed Wednesday.
Located outside of Madison, the facility has 214 workers.
Allstate said the workers could apply for 110 similar claims jobs that are open elsewhere nationwide, so the net job loss will be at least 104.
Allstate said it has eight other offices like this one nationwide, and technology enables the company to handle claims elsewhere, an Allstate spokesman said.
“There will be no net impact on customers,” he said.
Allstate-branded policy counts have also been down in recent years.
By Becky Yerak
FirstMerit Bank, which entered the Chicago market in 2010 through two acquisitions and has expressed interest in doing more deals in the Windy City, might be sitting on the sidelines in the market for at least a year.
On Thursday, the Akron, Ohio-based bank announced that it would buy Citizens Republic Bancorp of Flint, Mich. for nearly $1 billion.
At least one analyst said that the Michigan deal would likely distract FirstMerit from adding to its Chicago footprint for at least a year.
“Most investors had figured any meaningful” deal would occur in Chicago, Sandler O’Neill & Partners wrote in a report late Thursday afternoon. For one thing, Chicago has better demographics than its slower-growth home base in Northeast Ohio, Sandler said. Although Michigan is recovering, its “long-term prospects seem more likely to resemble those of Ohio than those of Chicago,” Sandler wrote.
Reaction was punishing, as FirstMerit stock closed down 11.3 percent, to $15.23 a share.
The Chicago area accounts for about a quarter of FirstMerit’s deposits, but assuming the Citizens’ deal is consummated, that percentage would fall to 16 percent, Sandler estimates.
Discussing the proposed deal on a conference call, FirstMerit’s chief executive said his bank would be unlikely to do another deal for about a year. But he didn’t think any attractive Chicago franchises would become available in the next year anyway.
“Hopefully, that will be the case,” Sandler wrote. “Should one of Chicago’s prized assets come up for bid sooner than expected, FirstMerit may not be in a position to capitalize on such an opportunity.”
By Becky Yerak
When it came time for Miami Heat all-star Dwyane Wade to pick a chairman for his Chicago-based foundation, Mesirow Financial Executive Vice President Les Coney turned out to be his go-to guy.
“You ask for an important name in Chicago, and he’s one of the guys’ names who comes up,” Wade, a Chicago native and founder of his Wade’s World Foundation, says of Coney. ChiFinance caught up with Wade on his recent visit to By the Hand Club for Kids at 1000 N. Sedgwick to announce a literacy promotion.
“I had the opportunity to meet with him and give him a sense of the vision of our foundation,” Wade said of Coney, who is in the Office of the Chairman of the Chicago-based financial services firm. “With his heart and his leadership in the community, he was able to help us.
“We’re so blessed to have Les as part of Wade’s World.”
Here’s a brief video interview that I did with Wade in which he discusses his literacy efforts, what he’s reading now, his favorite book, and the weird spelling of his own name: http://www.chicagotribune.com/videogallery/69713828/Business/Dwyane-Wade-promotes-literacy
By Becky Yerak
Allstate Corp executives got 92 percent approval on the say-on-pay vote at their annual shareholders’ meeting on Tuesday, up from the 58 percent they received last year.
Also, Chief Executive Tom Wilson received almost 97 percent of the votes cast as he sought reelection, up from 69 percent last year.
As previously reported, Allstate has made several compensation and corporate governance changes to appease shareholders.
Allstate stock started the day trading at $33.20, up from around $31 at last year’s annual meeting.
But at least four shareholders expressed concerns at the shareholders’ meeting, which lasted about an hour at the home and auto insurer’s Northbrook headquarters.
Recently, Allstate stock has been outperforming its peers.
But one shareholder asked about an ugly chart in the annual report. It showed that $100 invested in Allstate stock on Dec. 31, 2006, would be worth $49 today, vs. $75 for Standard & Poor’s property and casualty group.
“This kind of performance is very sad,” he said.
That same shareholder, who said he would vote for all the board members, also took issue with the way in which Wilson introduced the board members as a group, not individually, at the same time he introduced management.
Wilson assured him that the board acts independently. Wilson is the only company employee on the board.
Wilson said that Allstate’s stock might have been hit harder than other insurers in the S&P because, as the nation’s No. 2 home insurer, it has more exposure to the spate of catstrophes that have been hitting the county.
Another shareholder complained about Allstate’s falling earnings per share.
“We’re paying management to price product properly,” the investor said.
Jim Fish, executive director of the National Association of Professional Allstate Agents, and his wife, Nancy, are worried about Allstate’s treatment of its agents, regarding everything from pay to their dwindling ranks to admitted errors made on compensation reports and tax forms.
During the meeting Wilson said that total agent compensation under a new agency program will be at the same level or higher than an existing program. He also said that, of 1,000 agencies that responded to a survey after attending a recent forum in Las Vegas, 92 percent felt satisfied or very satisfied with their relationship with the company.. Allstate had about 10,000 agents at the end of 2011.
Nancy Fish said Allstate has been trying to trim agent ranks by more than 25 percent, with as many as 4,000 agents fired. She estimates that Allstate will be down to 9,000 agents next year.
Wilson disputed her statements and said there are no specific goals for agency numbers. “We do have performance standards around agencies,” he said.
He noted that Allstate has loaned $250 million for people to buy agencies, proof of its confidence in the agency model.
Jim Fish also said that, although Allstate has made some compensation and governance changes, Wilson still got a 20 percent raise to $11.2 million even though Allstate’s stock closed down in 2011.
Wilson referred him to the proxy and encouraged him to vote how he feels
Fish’s agent group has asked for an independent audit into how errors on compensation reports and tax forms occurred.
Wilson said the audit committee is looking into it.
Shareholder Martin Glotzer asked Wilson about Facebook.
Wilson said “social media is a growing and important tool.”
In response to a question, Wilson said there have been no conversations about a “change in control” of the company.
By Becky Yerak
Chicago’s billionaire Crown family and Baird Private Equity have teamed up to invest in a Chinese maker of refrigerated trucks, saying they expect rising income levels and greater food safety demands in the country to drive the need for such vehicles.
The family is making the investment through CC Industries, its private equity arm, and one of the companies in its portfolio. CC’s holdings consist of businesses in the transportation and food processing equipment industries, including Chicago-based Great Dane a 110-year old manufacturer of refrigerated trailers and truck bodies.
Terms weren’t disclosed.
Founded in 1993, Henan Bingxiong Refrigerated Truck Co., also called Ice Bear, will use the new capital from CC and Baird to expand plants in Henan and Shanghai.
The companies said that, in China, most perishable foods are shipped by non-refrigerated trucks. They cited estimates that 20 percent to 40 percent of food transported there ends up getting spoiled.
Rising income levels and higher food safety demands by both the Chinese government and Chinese consumers are expected to drive the need for refrigerated trucks, the companies said.
“Our leading market position in the refrigerated truck and trailer market will allow us to bring enormous resources to Ice Bear, and help them capitalize on the growing need for cold” transportation methods in China,” Great Dane Chief Executive Bill Crown said in a statement.
Brett Tucker, partner for Baird Capital Partners Asia, part of the private-equity unit of Milwaukee-based Robert W. Baird & Co., said his firm and Great Dane have spent three years looking for such opportunities in China.
As part of the deal, Dean Engelage, executive vice president of Great Dane, and Baird’s Tucker will join the Ice Bear board of directors.
By Becky Yerak
Hours after a departing Goldman Sachs executive alleged that the Wall Street firm had lost its moral compass, the chief investment officer of BMO Harris Bank assured his clients that the Canadian-owned institution is motivated to satisfy its clients.
On March 14, Jack Ablin, the CIO of Harris’ private banking arm in Chicago, sent an open letter to his clients, saying that his institution’s success is tied to theirs. His e-mail was prompted by a New York Times column in which a departing Goldman Sachs executive excoriated his firm for its practices.
The markedly different letter from BMO Harris Bank’s Ablin read:
“Ever since the financial crisis, we continually hear claims that Wall Street firms put their self interest ahead of their clients’ needs. An editorial in today’s New York Times personifies the point. After 12 years as a managing director at a prominent Wall Street institution, a managing director states that he has decided to resign, citing in his opinion a culture where profits come before the interests of clients.
“This tension between client’s interests and a firm’s bottom line has been around for decades. Sometimes what’s in the best interest of the client may not reap the greatest pecuniary rewards in the short term. In my experience, however, client success and firm success can peacefully coexist; in fact thrive. The key is timeframe.
“Having served clients for nearly 30 years I can tell you that the long term success of any institution, whether in the financial field or not, depends on the long-term success and satisfaction of its clients. This is a philosophy that I can proudly say motivate us at BMO-Harris Private Bank to come to work each day.
“Please do not hesitate to call me with comments.
Chief Investment Officer”
Here’s a link to a story about the Goldman letter: