Funds Of Fund

Funds Of Fund

Fairview Capital Partners was getting ready to face its greatest competitive challenge — and $640 million was on the line.

For years, co-founders JoAnn Price, 55, and Laurence Morse, 53, had concerns about financial behemoths such as Credit Suisse First Boston and AIG attempting to take over their private equity niche: emerging markets. The duo was forced to figure out inventive ways to diversify their Farmington, Connecticut-based firm. “We brought in partners who had broader networks because in this marketplace, it’s about relationships and deep access to resources,” says Price.

The co-founders knew exactly where to look for this type of intellectual horsepower. When the company was started in 1994, Bigler Investment Management Co. (BIMC), one of the nation’s premier fund of funds investment companies at the time, came on as an investor. In 1999, after Fairview severed all ties with the firm, Price and Morse recruited Bigler’s former president and chief investment officer Hanse Halligan and portfolio manager Matthew Schaefer to run Fairview Venture Management, a division designed to invest solely in top-tier general-market funds. The move would turn out to be an act of sheer brilliance.

In early 2004, Price and Morse discovered an opportunity to replace The Crossroads Group, one of the biggest private equity firms in the country, as manager of Connecticut’s state-sponsored Constitution Liquidating Fund. Entering the bidding process would place Fairview, which managed $900 million in capital, against the likes of Credit Suisse, with its $5 billion in private equity funds, and AIG, with more than $15 billion of capital under management. Could Fairview compete against these Goliaths?

To win the business, Price and Morse would have to make their case before Connecticut State Treasurer Denise Nappier and her advisory committee. Their presentation would have to be sharkskin tight since they were trying to convince the state that Fairview was the best firm to invest millions of dollars of public employees’ retirement funds. In two separate presentations, Price and Morse spent hours discussing the firm’s successful decade-long track record, reviewing their experienced management team, and explaining their investment philosophy. After weighing the merits of all of the firms, the committee came back with its decision. Fairview had won the business.

How was it able to beat the big boys?

“They won that assignment for $640 million because they came in No. 1 in the competitive process. The firm has had extensive experience especially as it relates to top-tier venture funds,” says Nappier. “Two of the partners at Fairview were responsible for the investment of the Constitution Fund [during its inception].” So Price and Morse had planted the seeds for their victory years ago when they hired Halligan and Schaefer, who initially raised capital for the vehicle as BIMC fund managers. Nappier was also impressed when she conducted an on-site visit to evaluate Fairview’s back-office operation and interview its employees. It didn’t hurt that Fairview also works with a lot of other similar funds.

Nappier’s decision proved to be a smart one. Since its inception, Constitution has been one of the state’s