After 15 years as an investment banker, Peter Nolan, managing director and co-head of securities brokerage Donaldson Lufkin & Jenrette's busy Century City office, has hopped the fence he's joined Leonard Green & Partners L.P., the big league leveraged buyout firm on the Westside.

So instead of designing, brokering and arranging financing for deals, Nolan will actually be a principal in buyouts.

"I never really expected to stay in investment banking as long as I did," said Nolan, who worked for Drexel Burnham Lambert Inc. before DLJ. "But I enjoyed it so much I stayed awhile."

It was Leonard Green & Partners a few years back that purchased drugstore chain Thrifty Corp. from a chastened Los Angeles-based Pacific Enterprises Inc., after the gas utility giant discovered that successful retailing was a tad tougher than getting regulated profits okayed by the state public utilities commission.

Pacific Enterprises, for decades a dependable dividend-type company, bought Thrifty in 1986 in a diversification move.

The chain flopped immediately under the utility's tutelage, and Pacific Enterprises' dividend was halved, never to recover.

In 1990, Green bought Thrifty, and later merged it into Payless Drugs, another chain. Green then sold the combined entity to drugstore chain Rite Aid Corp. for $2.5 billion, making whopping profits.

More recently, Green bought Leslie's Poolmart Inc., the publicly held pool supplies retailer based in Chatsworth.

Industry insiders credit Green with eyepopping 70 percent annual returns. "Green is a legend in this industry," said Nolan. "That's one of the reasons I joined."

In addition to its own capital, Green manages $500 million for pension funds and corporate investors, said Nolan.

Big returns

No doubt Green has amassed a spectacular record, but whenever tremendous annual returns are bandied about, I am reminded of Bill Mason, veteran money manager with Cullen Fortier Asset Management Inc., a $100 million shop in Woodland Hills, and also a Pepperdine prof.

Mason has pointed out that, through the miracle of compounding, those managers who acheive spectacular returns if they sustain them will control all the money on the planet within a generation.

For example, if Green & Partners have $1 billion under management today, they will have $40.6 trillion under management in just 20 years, given sustained 70 percent annual returns.

By way of comparison, the U.S. gross domestic product this year is well under $8 trillion.

Viewed from another perspective, if I drive by Green's office today, and toss a Benjamin Franklin over the transom to invest, then when I go back in 20 years, I'll have $40.6 million to retire on. It's nice to know I can have such comfortable golden years for so little initial sacrifice. I might leave them only $50, so I can have some fun over the weekend.

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