Trimaran Capital Partners is a middle-market private equity firm formerly affiliated with CIBC World Markets. Trimaran is headquartered in New York City and founded by former investment bankers from Drexel Burnham Lambert. Trimaran's predecessors were early investors in telecom and Internet businesses, most notably backing Global Crossing in 1997. Trimaran also led the first leveraged buyout of an integrated electric utility.
Since 1995, Trimaran and its successor entities have invested approximately $1.6 billion of equity in fifty-nine companies through transactions totaling more than $10 billion in total value. In addition, Trimaran's debt business has managed approximately $1.5 billion of leveraged loans across four collateralized loan obligation vehicles.Trimaran Capital Fund Management (company website, accessed August 27, 2010)
Since 2006, one of its co-founders, Andrew Heyer, lead a spinout of a portion of its team to form Mistral Equity Partners In 2008, the two remaining managing partners entered into a venture with Nelson Peltz’s Trian to create a new debt-focused business development company.
The firm is named for the trimaran, a multi-hulled boat consisting of a main hull and two smaller outrigger hulls. The firm's principals had used nautical terms to describe their predecessor entities including argosy, a merchant ship, or a fleet of such ships and caravelle, a small, highly maneuverable, two- or three-masted ship.
History
Trimaran Capital Partners was founded in 2000 by former Drexel Burnham Lambert and CIBC World Markets investment bankers Jay Bloom, Andrew Heyer, and Dean Kehler. The firm traces its roots back to the 1995 creation of the CIBC Argosy Merchant funds, a series of merchant banking investment funds managed on behalf of CIBC, and before that to the 1990 founding of the boutique investment banking firm The Argosy Group.
The Argosy Group The Argosy Group was a New York-based boutique investment bank founded in February 1990, and is Trimaran's earliest predecessor. Founded as a 9-person advisory firm by Bloom, Heyer, and Kehler, Argosy was one of several private equities and investment banking firms to spring up in the wake of the collapse of Drexel Burnham Lambert.The Drexel Diaspora. New York Times, February 6, 2005 (Accessed August 19, 2010) Before Drexel, the three bankers had all worked together at Shearson Lehman Brothers. Kehler and Bloom had worked together previously at Lehman Brothers Kuhn Loeb and were joined by Heyer when Lehman was acquired by Shearson/American Express. The Argosy team had been involved in many of the most prominent high yield financings of the preceding two decades, for companies including RJR Nabisco, Beatrice Foods, and Storer Communications.Anders, George. Merchants of debt: KKR and the mortgaging of American business, 2002. pp. 59, 94, 302
The Argosy Group focused on debt underwriting, private placements, sales and trading, proprietary special situation investing, and restructuring advisory assignments for highly leveraged companies. Argosy created a niche raising high yield debt.
Acquisition by CIBC
In April 1995, CIBC's investment banking subsidiary, then known as CIBC Wood Gundy announced the acquisition of The Argosy Group,Canadian Imperial Bank of Commerce Company History. Funding UniverseCIBC secures high yield with bond boutique buy. Crain's New York Business, May 5, 1997 (Accessed August 19, 2010)
The acquisition of Argosy marked an aggressive push by CIBC into the U.S. investment banking business. Prior to that point, CIBC had never done a junk bond deal. Argosy's three major principals had worked on some of the biggest junk bond deals of the 1980s while at Drexel Burnham Lambert. The 52 Argosy employees that CIBC acquired would constitute the core of what would become CIBC's High Yield Group and the CIBC Argosy Merchant Banking funds that were responsible for, among other things, the $2 billion windfall that CIBC would earn from its early investments in Global Crossing. The Argosy principals also managed two collateralized debt obligation vehicles known as Caravelle Funds I and II.Caravelle Advisors Launches Second CDO Fund, Caravelle II . Press Release, December 14, 2000 (Accessed August 19, 2010)
With the acquisition of Argosy in 1995 and Oppenheimer & Co. in 1997, the center of gravity of CIBC's investment banking operations began to shift toward the United States. CIBC's High Yield Group began to develop a reputation for financing complex leveraged buyout transactions and worked closely with several of the leading private equity firms.CIBC Wood Gundy Makes a Name in Junk Bonds. American Banker, October 6, 1997 (Accessed August 19, 2010) CIBC provided financing for many of the leading private equity firms of this period including: Apollo Management, Hicks Muse, Kohlberg Kravis Roberts & Co., Thomas H. Lee Partners, and Willis Stein & Partners.
Bloom, Heyer and Kehler took on increasing responsibilities within CIBC World Markets. Ultimately, as Vice Chairmen of the bank and co-heads of Leveraged Finance, the three Argosy founders had responsibilities for leveraged loan and high-yield sales, trading and research, debt private placements, restructuring advisory and financial sponsor coverage.CIBC World Markets: The Leveraged Finance Group. (Company Website). Archived Dec. 6, 2000. Accessed August 27, 2010 They were also responsible for the creation and management of multiple special situations investment funds and collateralized debt obligation funds, and the creation of a major leveraged finance business in the U.K. In the aggregate, these businesses had several hundred employees in the United States, Canada and the U.K.
Investment in Global Crossing (1997–1999)
In 1997, the CIBC Argosy Merchant funds backed Gary Winnick and his telecom venture, Global Crossing, which embarked on a project to build optical fiber cable connections under the ocean between Europe and North America. Bloom, Heyer and Kehler, the heads of the CIBC Argosy Merchant funds and all former Drexel bankers, were former associates of Winnick from his days in the 1980s as a salesman at Drexel Burnham Lambert under Michael Milken. They were also instrumental in providing Global Crossing with $35 million in equity financing before the company went public. CIBC would ultimately realize a gain estimated to be $2 billion from its relatively small equity investment in Global Crossing, making it one of the most profitable investments by a financial institution in the 1990s. The investment is also thought to have personally generated millions of dollars for Bloom, Heyer and Kehler.How Executives Prospered as Global Crossing Collapsed. The New York Times, February 11, 2002 (Accessed August 19, 2010)The Drexel Connection at Global Crossing. Business Week, March 11, 2002 (Accessed August 19, 2010)
CIBC's investment in Global Crossing provided a considerable boost for its investment banking operations in the U.S. and for Bloom, Heyer and Kehler. In fact, CIBC's gain on its investment in Global Crossing would represent more than 20% of the bank's profits in 2000.Bank Works To Improve Its Image In Canada. New York Times, February 27, 2004 Trimaran was founded in 2000, effectively on the back of the success of the Global Crossing investment. In April 2001, Trimaran closed on a $1 billion fund with capital provided primarily by CIBC.Trimaran Capital Partners Announces Formation of Trimaran Fund II at $1.043 Billion. Business Wire, April 11, 2001 () (Accessed August 19, 2010)
Spinout from CIBC World Markets (2000–2002)
The investment banking operations of CIBC World Markets reached their peak in 1999 and 2000, when the bank cracked the top ten of U.S. issuers of high yield bonds and the top twenty in mergers and acquisitions advisory. From 1995 through 2000, the High Yield Group at CIBC World Markets had grown to more than 120 and had raised more than $80 billion of high yield debt. Following the crash of the dot-com bubble and the shutdown of the high yield markets in late 2000, CIBC World Markets began to suffer a series of setbacks. In July 2001, the Wall Street Journal profiled CIBC World Markets, chronicling the rapid decline of the bank from the peaks of Wall Street's league table rankings."CIBC World Markets Trips in Big Leagues." The Wall Street Journal, August 3, 2001 (Accessed August 19, 2010)
At the same time, the High Yield Group was restructured with the original Argosy Group founders focusing their responsibilities on their new Trimaran Capital Partners fund and the older CIBC Argosy Merchant funds. Bloom, Heyer and Kehler were succeeded by managing directors Edward Levy and Bruce Spohler, who had worked previously at Argosy and Drexel, together with Bill Phoenix.CIBC World Markets Appoints New Vice-Chairmen. Business Wire, June 18, 2001 (Accessed August 19, 2010)
By 2002, as a result of these developments, the CIBC implemented a strategy to reallocate resources and capital away from the riskier CIBC World Markets division in favor of its retail operations. As part of this reallocation, and in an effort to reduce conflicts between the bank's principal investments and its financial sponsor clients, the Trimaran operations would subsequently spinout completely from CIBC World Markets. Trimaran Capital Partners became independent of CIBC in February 2006After a Year, Trimaran Pitch Gets Stale. Private Equity Insider, July 21, 2006
Investments (2002–2005) Although Trimaran had made some investments in telecom and internet startups in 2000 and had also made investments in companies such as Iasis Healthcare and Village Voice Media,The Village Voice, Pushing 50, Prepares to Be Sold to a Chain of Weeklies. New York Times, October 24, 2005 (Accessed August 19, 2010) the bulk of its capital from its $1 billion 2001-vintage private equity fund was uninvested after its first year and a half.
From the end of 2002 through mid-2005, Trimaran actively pursued new investments. In December 2002, Trimaran partnered with Kohlberg Kravis Roberts & Co. to purchase the transmission business subsidiary, ITC Transmission, from DTE Energy.DTE To Sell Power Transmission Lines For $610 Million. New York Times, December 4, 2002 (Accessed August 19, 2010) In 2003, Trimaran completed a number of leveraged buyouts including Reddy Ice (with Bear Stearns Merchant Banking),Bear Stearns And Trimaran Agree To Buy Packaged Ice. New York Times, May 14, 2003 (Accessed August 19, 2010) Norcraft (with Saunders Karp & Megrue)Trimaran, SKM Nail Down Norcraft Buy. Reuters Buyouts, October 20, 2003
Trimaran made a series of investments in 2004 including: jewellery retailer Fortunoff,Fortunoff Family Sells Controlling Interest. New York Times, July 31, 2005 (Accessed August 19, 2010)Sad Days at Fortunoff’s, but the Bargains! New York Times, March 4, 2009 (Accessed August 19, 2010)Ailing Fortunoff Attracts a Suitor. New York Times, January 31, 2008 (Accessed August 19, 2010)Equity Firm Said to Have Deal to Buy Control of Fortunoff. New York Times, November 16, 2004 (Accessed August 19, 2010) specialty apparel retailer Urban Brands (Ashley Stewart clothing) and auto parts manufacturer Accuride Corporation. In 2005, Trimaran would add Charlie Brown Steakhouse, which would later acquire Bugaboo Creek Steak HouseCastle Harlan Sells Charlie Brown Steakhouse Chain. New York Times, January 21, 2005 (Accessed August 19, 2010) in 2007. Trimaran would also make investments in Jefferson National and Broadview NetworksBroadview Networks, toting $320M in private funding, takes long road to IPO. The Deal, November 30, 2007 (Accessed September 27, 2009) among others.
Successor entities