L.A.’s Slow Fundraising Outpaced National Rate

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Private-equity fundraising in Los Angeles fell sharply in 2009 as the economy forced even well-heeled investors to tighten their purse strings.

According to a report released this month by Dow Jones LP Source, 16 Los Angeles County private equity funds raised a total of $7.3 billion, down 53 percent from 2008, when $15.3 billion was raised by 19 funds.

Still, Los Angeles outpaced the rest of the country, which saw fundraising totals drop 68 percent, the worst result since 2003. Buyout and venture capital firms saw the sharpest drop-offs, according to Dow Jones.

Locally, Oaktree Capital Management LP, the downtown L.A. investment giant founded by Howard Marks and Bruce Karsh, was the star of 2009, closing both the largest and second largest funds. The firm raised $1.6 billion for its OCM Opportunities Fund VIII and $1.5 billion for its OCM Principal Opportunities Fund V.

Still, many funds elected to postpone fundraising in the difficult economic climate. That means, of course, there will be less capital to go round for businesses seeking financing.

Andy Wilson, managing partner of Momentum Venture Management, a Pasadena firm that helps emerging companies develop their businesses and secure financing, said in a recent interview that the biggest challenge for private equity funds has been traditional large investors, which either are writing smaller checks or none at all.

“Institutional investors haven’t been wanting to commit to new capital commitments,” he said.

Credit Union Consolidation

A pair of L.A.-area credit unions recently announced mergers with smaller peers.

Pasadena Service Federal Credit Union, which has assets of $82 million, has merged with Vernon Commerce Credit Union, with $8 million in assets.

Separately, Printing Industries Credit Union, a $27 million-in-assets institution in Los Angeles, has merged with California Printing and Publishing Employees Credit Union, a Riverside institution with $8 million in assets.

Rita Fillingane, director of research and information for the California Credit Union League, said credit union mergers are often voluntary actions taken by small institutions to take advantage of economies of scale. The moves can help the credit unions offer more products and services, while providing additional resources to members.

“They are usually win-win situations,” she said.

The Pasadena Service merger, she said, appeared to be voluntary. Executives did not return calls for comment.

In the case of Printing Industries, however, the action was prompted by the smaller institution’s poor financial condition. In the third quarter, the credit union reported a loss of $311,000.

In a statement to members, California Printing and Publishing Employees cited “the continued negative earnings of the credit union” in its decision to seek a merger partner.

SPAC Buy

Pacific City Financial Corp., the Koreatown holding company for Pacific City Bank, announced this month that it has been acquired by a special-purpose acquisition company.

North Asia Investment Corp., a blank-check American Stock Exchange company owned by South Korean investors, acquired the small Korean-American bank, which has assets of $534 million, for $50 million.

After the transaction, which will dramatically strengthen Pacific City’s equity capital base, NAIC will be dissolved and the bank will continue as the surviving entity. All of Pacific City’s management will remain in place, the companies said.

The SPAC, formed in December 2007, reviewed about 200 potential acquisitions before settling on Pacific City, NAIC Chief Executive Thomas Kang said in a statement.

NAIC investors will receive slightly more than three shares of Pacific City for every share of NAIC, with the new company trading on the Amex.

Shares of NAIC closed at $9.90 Jan. 21, while Pacific City closed at $3 in over-the-counter trading.

Active Firm

With the deal-making and capital markets coming back to life, Century City investment bank Imperial Capital LLC announced several transactions this month.

The firm, which recently filed papers to go public, arranged a $250 million equity raise for AerSale Holdings Inc., an aircraft engine manufacturer in Coral Gables, Fla. Earlier this month, Imperial Capital co-managed a $200 million convertible subordinated debenture offering for GenCorp Inc., a Sacramento tech manufacturer.

Additionally, the firm advised Protect America Inc., an Austin, Texas-based alarm company, in its sale to private equity investors.

C-Suite News

Nara Bancorp Inc., the Koreatown holding company for Nara Bank, announced last week that Chief Executive Min Kim has resigned “to pursue personal interests.” Alvin Kang, the bank’s chief financial officer, was chosen to succeed Kim. … DoubleLine Capital LP, the fixed-income investment firm started in December by former TCW bond manager Jeffrey Gundlach, continued a recent string of new hires. Joseph Sullivan was named treasurer of DoubleLine Funds Trust and Bonnie Baha was hired as a portfolio manager. … Banking giant JPMorgan Chase & Co. announced that Joni Topper was hired as market manager for government banking in the Western region, based in downtown Los Angeles.

Staff reporter Richard Clough can be reached at [email protected] or at (323) 549-5225, ext. 251.

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