Arsenal Capital Invests in KGS as Private Equity Supports Broker-Dealers
Private-equity firm Arsenal Capital Partners LP is backing a pair of former Citigroup Inc. executives in a new fixed-income broker-dealer called KGS-Alpha Capital Markets LP, as buyout managers take advantage of turmoil in institutional brokerages.
An Arsenal-led group invested $100 million in New York- based KGS, headed by Levent Kahraman and Dan Goldman, Arsenal partner Carty Chock said in an interview. Alan Weber, an Arsenal operating partner and former head of U.S. Trust Corp., will serve as the chairman of KGS, which will focus on mortgage- backed and asset-backed securities.
“There’s a big market and a number of players have exited, leaving clients looking for people to work with,” Weber said in an interview, noting the importance of the KGS team’s background. “This investment allows us to leverage their talent and our capital into a highly successful business.”
Private-equity managers are purchasing or creating broker- dealers after the global credit crisis led to the demise of Lehman Brothers Holdings Inc. and Bear Stearns Co. in 2008. Pierpont Securities LLC, a Stamford, Connecticut-based brokerage focused on government bonds, said in March it raised $100 million each from investment firms Stone Point Capital LLC and General Atlantic LLC.
Kahraman, 40, was most recently managing director at Barclays Capital Inc., where he was head of collateralized mortgage obligations trading. Previously, he worked at Citigroup and Salomon Brothers. Goldman, 47, was with Citigroup and Salomon for more than 20 years, where he was head of North American fixed-income sales.
Arsenal, based in New York, made the KGS investment from its second fund, a $500 million pool it finished raising in 2006. It raised its first fund, at $300 million, in 2001.
The firm focuses on financial services, health care and specialty industrial companies and seeks to invest $25 million to $75 million per deal, Carty said.
To contact the reporters on this story: Jonathan Keehner in New York at jkeehner@bloomberg.net; Jason Kelly in New York at jkelly14@bloomberg.net
Rate this Page