Stone Point Capital L.L.C. has raised $2.3 billion in capital commitments for its fourth Trident fund, which it has already used to back perhaps the largest new bank formation in U.S. history.
The Greenwich private equity firm was spun out of Marsh & McClennan Companies Inc. in May 2005 for $3 million. Marsh & McClennan had established the initial $667 million fund in 1994, following it up with a $1.4 billion fund in 1999 and a $1.1 billion fund in 2004.
The company did not reveal investors in its newest fund ”“ as of May, New York City-based Marsh & McClennan reported having an $82 million commitment in Trident II.
Stone Point”™s current portfolio includes Wilton Re, a reinsurance company based in Wilton that raised an additional $300 million last spring from Lehman Brothers Holdings Inc.
Stone Point is run by Charles Davis, the firm”™s CEO who previously led investment banking services at Goldman Sachs & Co.; and Stephen Friedman, the retired chairman of Goldman Sachs who holds that title at Stone Point as well as with the U.S. Foreign Intelligence Advisory Board and the Intelligence Oversight Board.
Davis, did not respond to requests for an interview about Stone Point”™s plans for its newest fund.
Having built the firm largely on investments in insurance and benefits companies, Stone Point has already demonstrated its willingness to use its newest Trident fund to broaden an expansion into banking and other financial services, long before officially closing the fund to investors.
In April, Stone Point backed the $125 million formation of Atlanta-based Atlantic Capital Bank, which claims title to being the largest independent new bank in U.S. history.
Also that month, Stone Point bought out Automobile Protection Corp. (APCO) from Ford Motor Co. APCO administrates extended-service contracts on automobiles, recreational vehicles and parts sold in the United States and Canada. Ford reported that it received $180 million in the deal, registering a pretax gain of $51 million.
Not that Stone Point is abandoning its roots in the insurance industry. In January it used Trident IV to fund the purchase of Genex Services Inc., a Unum Group division with 1,600 employees that helps companies control costs associated with claims on workers”™ compensation, disability and health insurance. Genex had a $7.5 million profit last year on $186 million in revenue. The companies did not initially disclose transaction terms; Unum later reported a net cash inflow of $99 million in connection with the sale of Genex and a $6 million gain on the sale.
And in June, the Trident IV fund was used to create Edgewood Partners Insurance Center, a new property and casualty insurance brokerage in California. The startup promptly acquired Calco Insurance Brokers and Agents Inc., which has $13 million in annual revenue marketing insurance through trade organizations and other affinity groups.
Stone Point has followed such a startup model in the past ”“ in 2004 it used its Trident III fund to underwrite the formation of CompWest Insurance Co., in response to workers”™ compensation regulatory reforms implemented in California. WorkComp had a premium base of $113 million as of August when Stone Point sold off the San Francisco-based company to Accident Fund Insurance Company of America of Lansing, Mich.
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