Bloomberg News

Obama Fundraiser Said to Seek $1 Billion for Private-Equity Fund

October 10, 2013

Barack Obama’s top individual fundraiser, a former technology executive who collected millions of dollars for the president, is seeking as much as $1 billion for a private-equity fund that will invest in infrastructure and renewable energy, according to a person with knowledge of the matter.

Frank White Jr. has teamed up with two other Obama backers, Shomik Dutta and two-time Grammy Award-winning rapper Prakazrel Michel, to establish a Washington-based money-management firm called DuSable Capital Management LLC, according to a regulatory filing. DuSable plans to raise $500 million to $1 billion, said the person, who requested anonymity because the details are private.

White’s new firm joins a small group of money managers founded by former political figures and public officials, who have sought to parlay their connections to invest in industries that rely on direct or indirect government support. The biggest among them is Carlyle Group LP (CG:US), the buyout firm that got its start buying defense companies after the fall of the Berlin Wall. Monument Capital Group LLC and Darby Overseas Partners Ltd., both based in Washington, were also founded by former high-ranking officials.

“It gives them a particular edge against other firms that may not feel comfortable in looking at the government market or understand how Washington works,” said Michael Steed, who served as national director of the Democratic National Committee in the 1980s before forming Paladin Capital Group, a private-equity firm that invests in cyber-security providers.

Top Bundler

As a top Obama bundler, White raised more than $10 million from friends and associates for the president and the Democratic party, according to two people familiar with the matter, who requested anonymity because the information is confidential. White ranks as the president’s largest individual fundraiser, according to the people.

A bundler is someone who solicits campaign contributions from their personal networks and communities. Obama was the only candidate to identify all of his bundlers during the 2012 presidential campaign, though his list only gave broad amounts raised, with the top category being $500,000 or more.

“Without question, Frank was one of our top donors and was critical” to the success of Obama’s campaign, said Peter Newell, who served as chief of staff to Jim Messina, the former White House deputy chief of staff for operations. Michael Czin, a spokesman for the Democratic National Committee, declined to comment. White didn’t return telephone calls seeking comment.

Prior to setting up DuSable, White founded Advanced Concepts Inc., a Columbia, Maryland-based provider of technology services to the military and intelligence agencies. He sold that company to L-1 Identity Solutions Inc. in 2007 for $72 million along with earn-out incentives. He then became involved in Obama’s campaign for the presidency, serving as vice chairman of the 2012 re-election campaign and co-chairman of the president’s 2013 inauguration committee, according to DuSable’s website.

Banker, Rapper

Dutta, a co-founder at DuSable, is a former Morgan Stanley investment banker who also worked as national-finance consultant to the president’s re-election campaign and as a special assistant in the White House. Michel, one of DuSable’s owners, is best known as Pras, a founding member of the hip hop group called the Fugees. He has contributed to Organizing for Action, a non-profit that promotes Obama’s agenda, as well as the Democratic Party and Black Men Vote, a super-political action committee.

Brandon Hurlbut, who stepped down as chief of staff at the U.S. Department of Energy in June, will serve as an adviser to DuSable. Its other adviser will be William Lee, president and co-founder of Bright Plain Renewable Energy LLC, a San Francisco-based firm that has teamed up with D.E. Shaw & Co. to buy solar power projects.

‘Competitive Advantage’

A political career in Washington can prepare executives for the task of raising money from wealthy and institutional investors and help them understand regulatory issues. White will “employ his network, contacts, and reputation” to source attractive investment opportunities for DuSable, according to the registration filed with the U.S. Securities and Exchange Commission in July. The filing also said that White’s government and private-sector contacts would provide the fund with “a competitive advantage” in addressing global regulations and identifying promising executives.

Carlyle Group’s past and present executives include David Rubenstein, who previously served as deputy assistant to the president for domestic policy under Jimmy Carter, and Frank Carlucci, an ex-secretary of defense. The firm, started in 1987, initially used government connections to invest in defense contractors before diversifying into all types of deals. Monument Capital was co-founded by Douglas Baker, a former special assistant to President George W. Bush.

Romney’s Route

“I knew what I knew and I knew how it could be a good idea,” said Nicholas Brady, who in 1994 started Darby Overseas Partners LP, a Washington-based private-equity firm that specializes in emerging markets, after working as U.S. Treasury Secretary under Ronald Reagan and George W. Bush. Brady said he spent four years in the government dealing with Latin America and had been on the Kissinger Commission in Central America.

Some private-equity executives have taken the opposite route. Mitt Romney, the onetime chief executive officer of Bain & Co., challenged Obama for the presidency in 2012 after a career leading private-equity firm Bain Capital LLC.

DuSable shares its name with Jean Baptiste Point DuSable, the first settler of Chicago as well as the city’s first black resident.

Investing Strategy

The firm’s strategy is based on a theme that Obama has often sounded in addressing the nation, that the U.S. infrastructure is crumbling, and will need increased attention in the coming years. The fund will also seek to invest in infrastructure assets such as airports, which overly indebted municipalities such as Detroit are selling as they seek to recapitalize their balance sheets, said the person familiar with the matter.

On the renewable energy side, DuSable will focus on deploying technologies in emerging markets that face high unsubsidized electricity costs, the person said. Renewable energy remains a priority for Obama, who announced in June a climate action plan to cut carbon pollution, in part by providing access to public lands for the construction of wind and solar projects.

“Certainly the industry is in need of of some favorable equity capital into renewables,” said Robert Banks, CEO of Seminole Cos., a money-management firm in Belleair Bluffs, Florida, which makes renewable energy investments. “There would be more deals done if there was easier access to capital.”

To contact the reporter on this story: Miles Weiss in Washington at mweiss@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net


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