Oct 31, 2019

‘Friendly’ Fund Backed by Platinum’s Gores Seeks $1 Billion

By John Gittelsohn

(Bloomberg) -- A “management friendly” fund backed by billionaire Tom Gores’s Platinum Equity plans to raise as much as $1 billion to buy minority stakes in undervalued public companies and use experts from the private equity firm to help improve performance.

Centerline Capital Management, founded by hedge fund veteran Josh Lobel, is launching the fund to invest in publicly traded mid-sized companies, according to a statement Wednesday. Lobel plans to tap into Platinum’s management staff to provide turnaround support for structural and operational improvements, including acting as a white knight for firms facing more hostile activist investors.

The approach is a contrast to the tactics often favored by activist investors, who use their ownership stakes to publicly lobby for asset sales, share repurchases or management changes. Other so-called friendly or constructive activist investors include Blue Harbour Group and ValueAct Capital Management.

“Where there is an activist involved, we can see ourselves as an antidote to disruptive activism,” Lobel, who expects to begin fundraising next year, said in a telephone interview. “The important part is where we can have the right relationship with management and where we can make a difference.”

Platinum Equity, founded in 1995 by Gores and based in Beverly Hills, California, has more than $19 billion in assets and a portfolio of about 40 operating companies in manufacturing, distribution, media and other industries. Gores also owns the National Basketball League’s Detroit Pistons.

“Platinum Equity is a control-oriented investor,” said Mark Barnhill, a spokesman for Gores’s firm. “We see a lot of public companies that could use strong operational support, but they’re typically not available for a control acquisition. We think those opportunities are tailor-made for a firm like Centerline, which can provide strong operational and strategic support from a minority investment position.”

Lobel previously co-founded Archer Capital Management, a Beverly Hills-based event-driven hedge fund that stopped fundraising in 2017 and returned investor money last year. The Centerline investment team includes professionals who have worked together for years.

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