Why Texas Pacific Sees Promise In Oxford

Is financier David Bonderman crazy like a fox?

With its ballooning losses and snarled information systems, managed-care pioneer Oxford Health Plans Inc. hardly looks like an investor's dream. But that's just the way Texas Pacific Group likes it.

The $2.5 billion private investment partnership, led by Fort Worth financier David Bonderman, has a reputation for finding treasures where others see trouble. It has invested in everything from Continental Airlines to Del Monte Foods and Ducati motorcycles.

Bonderman, 55, a former adviser to billionaire Robert M. Bass, declined to comment, but a spokesman says TPG was attracted by Oxford's "preeminent franchise" and growing customer base. TPG planned to team up with Kohlberg Kravis Roberts & Co. But after KKR pulled out, TPG agreed to invest $350 million for a stake that could reach 22%.

Oxford will be a formidable challenge for TPG and Norman C. Payson, the new chief that the group will install at Oxford. If history is any guide, TPG will give Payson, former head of Healthsource Inc., lots of running room--but plenty of oversight.

That was the drill at Continental, which Bonderman and his Air Partners investment group led out of bankruptcy in 1993 before forming TPG. Counting a pending deal to sell Air Partners' 14% equity stake to Northwest Airlines Inc., the group has reaped a $700 million gain on its $66 million investment in Continental. No wonder TPG is willing to try some surgery on Oxford.