BY Greg Edwards
(reprinted from the St. Louis Business Journal, OCT. 5, 2007)
Bush O'Donnell & Co. Inc. in Clayton has received approval for its second private debt and equity fund, Eagle Fund II, and raised $170 million to fund it.
"One, the fund has been officially launched, and two, we've raised the money," Jim O'Donnell, president and chief executive, said. "We've closed on all of our funding for this particular fund."
The fund received approval from the Small Business Investment Co., part of the U.S. Small Business Administration, O'Donnell said. The SBIC program is designed to stimulate small businesses by supplementing the flow of private equity capital and long-term loans.
"This is great news because Bush O'Donnell has a history of investing in their own backyard, the Midwest," said Scott Osborne, managing principal of Pritchard Osborne Executive Ventures. "Those investments preserve management jobs, legacy and independence."
Bush O'Donnell's other fund, Eagle Fund I, started in 2003, still has investment capacity but is maturing, O'Donnell said. It has about $75 million in assets under management.
"Now we will have about $250 million under management in the two funds," O'Donnell said. Both funds invest in U.S. small businesses and are managed by Bush O'Donnell's Capital Partners division.
"These funds have about a 10-year life," he said. "You spend four or five years investing the money and the next four or five years selling the businesses. Knowing that we were about at the end of the investment stage of the first fund, we received approval for our Eagle Fund II."
In addition to buying into businesses and later selling them, Bush ODonnell makes what are called mezzanine loans to companies to bridge their capital needs. "In the mezzanine debt business, you just loan the company money and they pay it back," O'Donnell said.
The retired chairman and chief executive of Capital For Business, also named Jim O'Donnell, added, "They've raised a material amount of money, and it's always a good market for those with a good track record."
Bush O'Donnell & Co. is a private financial holding company with interests in private and public funds management, insurance, manufacturing and investment banking. It had revenue of $130 million in 2006, 94th among privately held companies in St. Louis.
A second division, Bush O'Donnell Investment Advisors, is an investment management firm with about $300 million under management for individual clients and a few charitable foundations.
In September, Molina Healthcare Inc. of Long Beach, Calif., agreed to pay about $95 million for Mercy CarePlus, a Medicaid health-care plan owned by a Bush O'Donnell subsidiary and the Sisters of Mercy Health System in St. Louis. Bush O'Donnell will get about $38 million, and the Sisters of Mercy Health System will receive $47.5 million.
Earlier this year, Bush O'Donnell and the Omnia Group, also of St. Louis, became investors in Nu-Era Group, a supplier of store fixtures to Target and other retailers. Although the amounts were not disclosed, Bush O'Donnell invested through Eagle Fund I, which places a maximum of $4 million in any single investment.
Reprinted with permission from the St. Louis Business Journal,
©2007 all rights reserved.