Skip to Content

Term Sheet — Tuesday, March 29

Random Ramblings

Andrew Caspersen, a senior private equity executive with PJT Partners, has been arrested and charged with attempting to defraud investors out of around $95 million. In addition to the criminal charges filed by Preet Bharara, the U.S. Attorney for the Southern District of New York, Caspersen is the subject of a parallel civil complaint filed by the Securities & Exchange Commission.

“To advance his $95 million fraud scheme, Caspersen allegedly put on a shameful charade—creating fake email addresses, setting up misleading domain names and inventing fictional financiers,” Bharara said in a statement. “When confronted by a suspicious client who had invested $25 million, Caspersen had no good answers.”

Caspersen is a private equity veteran who spent the first nine years of his career at secondaries firm Coller Capital. In 2013 he joined Park Hill Group, a placement agent that was owned by The Blackstone Group, as a managing principal focused on secondary advisory activity. Last fall, Park Hill was included in Blackstone’s spin-out of its M&A advisory business, which was renamed PJT Partners and led by former Morgan Stanley banker Paul Taubman.

News of Caspersen’s arrest caused PJT’s stock to dip more than 12%, but the origins of his alleged fraud actually began while Park Hill was still part of The Blackstone Group.

According to the complaints, Caspersen was worked on Park Hill’s assignment for private equity firm Irving Place Capital Partners, when it sought to restructure a $2.7 billion fund that it had raised in 2006. The plan (as reported at the time by Fortune and others) was to create a stapled secondary, in which investors essentially buy out the existing portfolio and commit new capital for additional investments. That deal closed last summer, led by Caspersen’s former colleagues at Coller Capital.

A few months later, PJT spun out of The Blackstone Group. And this is where Caspersen allegedly transitioned from intermediary to grifter.

According to the complaint, Caspersen in late October 2015 reached out to an individual who advises a charitable foundation, claiming to have an opportunity related to Irving Place’s stapled secondary. He allegedly claimed that Coller had been concerned that it couldn’t finance the entire deal on its own, and had set up an $80 million credit facility backed by the Irving Place portfolio assets—but only $30 million was spoken for. Moreover, Caspersen claimed that his own family office was among the investors.

The individual agreed to invest $25 million—$24.6 million on behalf of his charity and $400,000 from his own personal account.

But Coller had never authorized Caspersen to set up such a vehicle. Nor had Irving Place, which sources say was unaware of the entire situation until this past weekend.

Just weeks later, Caspersen allegedly wired $17.61 million from the special purpose vehicle into his own brokerage account. He then wired another $8.1 million into a PJT-controlled bank account, “for the purpose of covering up an earlier unauthorized wire transfer of the same amount Caspersen had diverted for his own use.”

But Caspersen’s personal investments didn’t bear fruit, and earlier this month he began soliciting that same individual for another $20 million investment into the same deal. Caspersen claimed his family office was investing an additional $5 million. When the individual said that he wanted to speak directly to the special purpose vehicle’s signatory at Coller Capital, Caspersen allegedly created an email address that the individual quickly sniffed out as a fake. Moreover, the individual called Coller and was told that no one with the signatory’s name had ever worked there.

As Caspersen’s alleged fraud was being uncovered, he apparently tried a last-ditch attempt to reimburse the foundation by raising $50 million for the same “deal” from another institution, but it never came to fruition. Instead, he was charged with securities and wire fraud. As part of his bail package, Caspersen is required to seek treatment for alcohol abuse.

A few outstanding questions:

1. There is no explanation in either lawsuit as to why Caspersen needed so much money. He was pulling in a salary in excess of $3.5 million per year from Park Hill, and comes from a wealthy family.

2. We do not know the name of the foundation that was allegedly defrauded, but it’s fairly unusual for there to be a charity that can simultaneously: (a) Be large enough to make a $25 million private equity investment, and (b) Be unsophisticated enough to not have an in-house alternative investment team. If you’ve got some info, please let me know via email, Confide or our anonymous tip line.

3. We do not know the name of the individual who recommended the investment to the foundation, although the complaint says he works at a hedge fund. Clearly this individual may soon face his own lawsuit for breach of fiduciary duty. For example, he never checked to see if the signatory existed nor did he dig even a few inches into the SPV’s relationship (or lack thereof) to Irving Place.

4. Caspersen has a family history of alleged fraud. His father, Finn Caspersen, committed suicide as federal authorities were building a large case against him for tax evasion.

5. The complaints do not include more information about the $8.1 million that Caspersen allegedly stole from PJT, but clearly the disclosure raises control concerns for the firm.

PJT Partners late yesterday issued a lengthy statement which said, in part:

“We were stunned and outraged to learn of the fraudulent circumvention and violation of the Firm’s compliance policies and ethical standards by Andrew Caspersen, who was a member of the Secondaries Group at Park Hill since January 2013. Immediately upon learning of facts that suggested improper behavior, we commenced an internal investigation led by outside counsel, Paul, Weiss, Rifkind, Wharton & Garrison, and very quickly thereafter, brought the matter to the attention of the U.S. Attorney’s Office in Manhattan. Since that time we have cooperated fully with law enforcement, and we will continue to do so. We have terminated Mr. Caspersen for cause.

A Blackstone Group spokeswoman said: “We are appalled by the fraudulent actions of this former Park Hill employee. PJT and the authorities will have our full cooperation and assistance as they pursue this matter.”

Coller’s statement: “At this stage, the firm has no reason to believe there was any wrongdoing by Mr. Caspersen during his time of employment with Coller. No accusations have been made against Coller Capital or any current member of the firm’s staff. Indeed, Coller’s first knowledge of the matters under investigation by the US Attorney’s Office was in late March 2016.”

Irving Place declined comment.

THE BIG DEAL

• Betterment, a New York-based “robo-advisor,” has raised $100 million in Series E funding at a $600 million pre-money valuation. Kinnevik led the round, and was joined by return backers Bessemer Venture Partners, Anthemis Group, Menlo Ventures and Francisco Partners. Read more.

VENTURE CAPITAL DEALS

• LeSports, a Chinese digital eco-sports company that operates as an independently-funded subsidiary of LeEco, has raised $1.2 billion in Series B funding at a $2.1 billion pre-money valuation. HNA Group led the round, and was joined by Sun Honglei, Jia Nailiang and Liu Tao. The company previously raised a $123 million Series A round from Wanda Group and Yunfeng Capital. Read more. www.letv.com

• Figtree Financing, a San Diego-based residential financing program for cleantech products, has raised $30 million in Series A funding led by LL Funds. www.figtreefinancing.com

• Rythm, a French developer of a headset for improving sleep quality, has raised around $11 million in new VC and public grant funding. Read more.

• Gadeta BV, a Dutch developer of cancer immunotherapies based on gamma delta T cell receptors, has raised €7 million in Series A funding. Baxalta Ventures and Medicxi Ventures co-led the round, and were joined by Utrecht Holdings. www.gadeta.nl

• Havenly, a Denver-based online interior design platform, has raised $5.8 million in Series A funding. Binary Capital led the round, and was joined by Foundry Group and Chicago Ventures. Read more.

• Raden, a New York-based developer of Bluetooth-enabled luggage, has raised $3.4 million in seed funding. First Round Capital and Lerer Hippeau Venture co-led the round, and were joined by Pritzker Group, Flybridge Capital Partners and individual angels. Read more.

• Umbo CV, a security camera startup with offices in Taipei and San Francisco, has raised $2.8 million in seed funding. AppWorks Ventures led the round, and was joined by Mesh Ventures, Wistron Corp. and Phison Electronics. www.umbocv.com

• Pyze, a Redwood City, Calif.-based mobile business intelligence startup, has raised $1.7 million in seed funding co-led by John Chisholm Ventures and DoubleRock. www.pyze.com

PRIVATE EQUITY DEALS

• Advent International has agreed to acquire a majority ownership stake in ATI Physical Therapy, a Bolingbrook, Ill.-based outpatient physical therapy provider, from KRG Capital Partners. No financial terms were disclosed. www.atipt.com

• Affinity Equity Partners has acquired the general practitioner practice management software unit of Primary Health Care (ASX: PRY) for A$155 million. Read more.

• Anbang Insurance of China has increased its takeover offer for Starwood Hotels & Resorts (NYSE:HOT) to around $14 billion. Other members of the Anbang consortium include J.C. Flowers and Primavera Capital. Rival Marriott International (Nasdaq: MAR) is sticking with its $13.5 billion bid. Read more.

• APE Companies, a Deer Park, Texas-based portfolio company of Ridgemont Equity Partners, has acquired Corrosion Specialties Inc., a Duluth, Ga.-based distributor of corrosion control equipment and consumable products to the transportation, manufacturing, and energy industries. No financial terms were disclosed. www.apecompanies.com

• eBay Enterprise Marketing Solutions, a portfolio company of Banneker Partners and Permira, has sold its studio unit (including facilities in New York, Louisville and King of Prussia, Penn.) to Industrial Color Brands. No financial terms were disclosed. Industrial Color Brands shareholders include GarMark Partners and Stone Canyon. www.industrialcolor.com

• Grey Mountain Partners has recapitalized existing portfolio company Binswanger Enterprises, a Memphis, Tenn.-based installer and retailer of architectural glass and aluminum products. No financial terms were disclosed, except that Yukon Partners provided mezzanine financing. www.binswangerglass.com

• Hastings Equity Partners has acquired Cactus Fuel LLC, a Midland, Texas-based distributor of fuel and lubricants to upstream and midstream customers in the Permain Basin. No financial terms were disclosed. www.hastingsequity.com

• I Squared Capital has agreed to acquire Viridian Group Holdings Ltd., an Ireland-based provider of gas and electricity, from Arcapita. No financial terms were disclosed, but various media reports value the deal at around €1 billion. Read more.

• Perky Jerky, a Greenwood Village, Colo.-based maker of ultra-premium beef and turkey meat snacks, has raised an undisclosed amount of private equity funding from Sunrise Strategic Partners. www.perkyjerky.com

• The Riverside Company has acquired a minority equity stake in Bentley Laboratories LLC, an Edison, N.J.-based company focused on the formulation and outsourced manufacturing of products for the beauty and OTC pharmaceutical industries. No financial terms were disclosed. www.bentleylabs.com

• Silverfleet Capital has agreed to acquire a majority stake in Coventya, a Paris-based maker of specialty chemicals used for surface treatment, from Equistone Partners Europe. No financial terms were disclosed. www.coventya.fr

IPOs

• Aeglea BioTherapeutics Inc., an Austin, Texas-based developer of treatments for inborn errors of metabolism and therapies targeting tumor metabolism, has set its IPO terms to 3.5 million shares at between $16 and $18 per share. It would have a fully diluted market value of around $203 million, were it to price in the middle of its range. The pre-revenue company plans to trade on the Nasdaq under ticker symbol AGLE, with Cowen & Co., UBS and BMO Capital Markets serving as lead underwriters. Shareholders include Lilly Ventures (26.3% pre-IPO stake), Novartis Bioventures (25.6%), OrbiMed Advisors (7.1%) and Jennison Associates (5.7%), UT Horizon Fund, Venrock, RA Capital Management, Rock Springs Capital, Ally Bridge Group and Cowen Investments. www.aegleabio.com

• Forterra, a British brick-maker owned by Lone Star Funds, said that it plans to list in London next month. Read more.

• Leejam Sports Co., a Saudi Arabia-based owner of the Fitness Time gym chain, is prepping an IPO, according to Bloomberg. The company is backed by Investcorp, and could seek upwards of $267 million in exchange for a 30% float. Read more.

 

 

 

EXITS

No exit news this morning.

OTHER DEALS

• Affymetrix (Nasdaq: AFFX), a Santa Clara, Calif.-based maker of molecular diagnostics equipment, is sticking with a $1.3 billion (or $14 per share) takeover offer from Thermo Fisher Scientific (NYSE: TMO), despite a $17 per share offer from a group of former executives and SummitView Capital (which has since been withdrawn). Read more.

• Virgin America (Nasdaq: VA) has received takeover offers from JetBlue Airways Corp. (Nasdaq: JBLU) and Alaska Air Group Inc. (NYSE: ALK), according to Reuters. Read more.

FIRMS & FUNDS

• No firm or fund news this morning.

MOVING IN, ON & UP

• Neal Hansch has quietly been named the new CEO and managing partner of Sherpa Foundry, a San Francisco-based group that helps bridge the digital divide between older companies and tech startups. He succeeds founding CEO Tina Sharkey, who will remain as a Sherpa Foundry partner and CEO of a stealth consumer startup called Dhosi. Hansch has spent the past two years as managing director of an incubator program affiliated with the Meltwater Entrepreneurial School of Technology. Read more.

• Chris Buckman has joined EnerTech Capital as a vice president. He previously was VP of business development with Moore Pipe and, before that, served in various executive positions with Ignite Energy Services. www.enertechcapital.com

• Timothy Leland has joined Eyecare Partners, a portfolio company of FFL Partners, as director of corporate development. He previously was a managing director with Twain Financial Partners and, before that, with TGP Investments.

• Mike Majors has joined Boston-based VC firm Data Point Capital as a managing partner. He previously led the Industry of the Future Fund for Siemens Venture Capital. www.datapointcapital.com

Share today’s Term Sheet:
http://fortune.com/newsletter/termsheet