Lone Star Funds

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Lone Star Funds
Limited partnerships
Industry Private equity
Founded 1995
Headquarters Tower at Cityplace
Dallas, Texas, U.S.
Key people
 John Grayken, founder & chairman
Products Investments, private equity funds
Total assets $45 billion[1]
Website www.lonestarfunds.com

Lone Star Funds is a US private equity firm that invests in distressed assets both in the US and internationally.[2] The founder of Lone Star established its first fund in 1995 (under a different name) and Lone Star has to date organized fifteen private equity funds with total capital commitments since inception of over $59 billion (as of June 2015).[3] Lone Star’s investors include corporate and public pension funds, sovereign wealth funds, university endowments, foundations, fund of funds and high-net-worth individuals.[4] Lone Star Funds has affiliate offices in North America, Europe and Japan.[5]

Hudson Advisors LLC, an approximately 800-person global asset management company owned and controlled by the founder of Lone Star, performs due diligence and analysis, asset management and related services for Lone Star Funds.[6] In this capacity, Hudson Advisors LLC has managed in excess of $95 billion of assets for Lone Star Funds since inception.[7]

History

Lone Star was founded by John Grayken.[8] From 1993 to 1995, Mr. Grayken was Chairman and CEO of Brazos Partners L.P., a joint venture between the Robert M. Bass Group and the Federal Deposit Insurance Corporation,[9] that resolved approximately 1,300 “bad bank” assets resulting from the U.S. savings and loan crisis in the early ‘90s.[10] During this period, Brazos Advisors LLC was formed to provide asset-management and related services to Brazos Partners.

Following Brazos Partners, Grayken organized institutional capital to continue investing in distressed assets, closing Brazos Fund, L.P. in 1995 with approximately $250 million of capital commitments.[11]

Lone Star Opportunity Fund, L.P. followed in 1996, with approximately $396 million of capital commitments.[12] At that time Brazos Advisors, LLC was renamed Hudson Advisors LLC.[13]

After an expansion into Canada in 1995 and 1996, Grayken pursued the launch of a global platform for Lone Star in 1997.[14] Since then, Lone Star has invested extensively in North America, Europe and East Asia.[15] Lone Star invested primarily in East Asia, including Japan, Korea, Indonesia and Taiwan, following the Asian financial crisis in the late 1990s.[16] In the mid-2000s, following the establishment of the Eurozone, Lone Star increased its investment focus in Europe.[10] And with the onset of the global financial crisis, from 2007 Lone Star was again actively investing in the U.S.[8]

In July 2015, Lone Star acquired the UK property investment and development company Quintain for £700 million.[17]

Investment approach

Lone Star invests in a variety of asset classes, primarily distressed opportunities in developed markets.[18]

Consumer Debt

Lone Star Funds purchased payday loan operator DFC Global in 2014.[19]

In 2013, the United States Consumer Financial Protection Bureau issued a consent order against a subsidiary for making false statements about auto loans to soldiers and veterans. The company was required to refund $3.3 million to servicemembers.[20] In June 2015, a year after its acquisition by Lone Star Funds, the company announced that it would wind down the program and cease taking on new customers.[21]

In October 2015, the UK Financial Conduct Authority ordered an affiliate to refund £15.4 million to 147,000 customers[22] after finding that the company was lending more to borrowers than they could afford to repay.[23]

Residential Debt

Lone Star Funds established residential lender Caliber Home Loans in 2013. Caliber Chairman and CEO Joe Anderson is a former manager of Countrywide Financial’s Consumer Markets Division.[24] Caliber’s Chief Operating Officer,[25] Chief Financial Officer,[26] and Executive Vice President of Operations[27] are former Countrywide executives.

The New York Times reported in September 2015 that "the acquisition of distressed mortgages by Lone Star is the engine in a well-oiled securitization machine that assumes that foreclosure and resale of the homes are inevitable components of the process."[28] In October 2015, the New York Times reported that New York Attorney General Eric Schneiderman had opened an investigation into Caliber Home Loans after receiving a "surge in consumer complaints."[29]

Funds investment vehicles

Fund Vintage
Year		 Committed
Capital
Lone Star Real Estate Fund IV 2015 $5.8B
Lone Star Residential Mortgage Fund I 2015 $1.3B
Lone Star Fund IX 2014 $7.2B
Lone Star Real Estate Fund III 2013 $7.0B
Lone Star Fund VIII 2013 $5.1B
Lone Star Fund VII 2010 $4.6B
Lone Star Real Estate Fund II 2010 $5.5B
Lone Star Fund VI 2008 $7.5B
Lone Star Real Estate Fund 2008 $2.4B
Lone Star Fund V 2005 $5.1B
Lone Star Fund IV 2002 $4.2B
Lone Star Fund III 2000 $2.3B
Lone Star Fund II 1999 $1.2B
Lone Star Opportunity Fund 1997 $396M
Brazos Fund 1995 $250M

[30][31][32][33]

See also

References

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  8. ↑ 8.0 8.1 Lua error in package.lua at line 80: module 'strict' not found.
  9. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  10. ↑ 10.0 10.1 Lua error in package.lua at line 80: module 'strict' not found.
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  18. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  19. ↑ "Lone Star Funds to Buy DFC Global," Wall Street Journal, 4/2/2014
  20. ↑ CFPB press release issued 6/27/2013
  21. ↑ Company website accessed 11/3/2015
  22. ↑ "Dollar Financial ordered to repay £15.4 million to customer," The Guardian, 10/26/2015
  23. ↑ FCA press release issued 10/26/2015
  24. ↑ Joe Anderson LinkedIn profile accessed 11/2/2015
  25. ↑ Russ Smith LinkedIn profile accessed 11/2/2015
  26. ↑ Stephen Smith LinkedIn profile accessed 11/2/2015
  27. ↑ Tammy Richards LinkedIn profile accessed 11/2/2015
  28. ↑ "As Banks Retreat, Private Equity Rushes to Buy Troubled Home Mortgages," New York Times, 9/28/2015
  29. ↑ "New York Attorney General Examining Private Equity Firm’s Mortgage Business," New York Times, 10/6/2015
  30. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  31. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  32. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  33. ↑ Lua error in package.lua at line 80: module 'strict' not found.

External links

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