Since former Treasury Secretary Tim Geithner is
headed to private equity firm Warburg Pincus, it’s time to take a little dive into the firm’s history and what it’s been up to.
Awesomely, this story will include Nazi interrogations, Jordanian royalty, and some pretty hefty deals.
Warburg Pincus was founded in 1966 when founders Eric Warburg and Lionel Pincus merged their two private equity firms. Now it operates all over the world with $US35 billion in assets under management and stakes in 125 companies.
Warburg, born in Germany in 1900, came from an old banking family. He fought for Germany in WWI and learned the family trade in London, Frankfurt, NYC, and Berlin. He was a partner at M. M. Warburg & Company in Hamburg until 1938.
That is when he and his family had to leave Nazi Germany. They were Jewish, and quickly joined the war effort against the Nazis in the United States. Warburg himself served as a lieutenant in the U.S. Army, was an intelligence officer, and interrogated captured Nazi leadership, according to The New York Times.
For his efforts, Warburg was awarded the Legion of Merit by the United States, the Order of the British Empire and the Croix de Guerre. He died in Germany in 1990. Before that he served as president of Warbug Pincus until 1973.
Lionel Pincus’ story begins under less extraordinary circumstances. He was born in Philadelphia in 1931, went to UPenn and Columbia, joined an investment firm, and was made managing partner by age 29.
He started his own firm in 1964. After merging with Warburg, Pincus pushed hard to end regulation that did not allow pension funds to invest in private equity firms. He got what he wanted, and as a result the industry was changed forever.
For all his wealth and power, however, Pincus’ life was relatively quiet until the end. In the 1990s his wife died and he started a highly publicized relationship with Princess Firyal, the ex-wife of the brother of King Hussein of Jordan.
From The New York Times’ obituary for Pincus in 2009:
Growing rancor between Princess Firyal and Mr. Pincus’s sons came into public view in court filings centered on two apartments that Mr. Pincus had bought in the Pierre hotel for $US22.6 million seven years ago.
In a complaint filed in New York State Supreme Court in August, the sons alleged that Princess Firyal had impeded the sale of the two units, the proceeds of which they said would go to charity. The princess had argued that she had a right to the property. Details of the recently negotiated settlement were not available.
Now, for the deals. Since the firm’s been around for so long, there are quite a lot of them. Some of the most successful, though, have been investments in 20th Century Fox, Mellon Bank, Humana, and toy company Mattel.
This May, the firm closed an $11.2 billion fund under the leadership of its current CEOs, Joseph Landy and Charles Kaye. Also this year, the firm sold Neiman Marcus to an investor group for $US6 billion and sold Bausch & Lomb Holdings Inc, which it bought in 2007 for $US4.5 billion, in an $US8.7 billion deal.
It was Warburg Pincus’ biggest deal ever.
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