Creation of Latin Power Team and Funds
Corporate Ownership Changes
Launch of Conduit Capital Partners
The formation of Conduit Capital dates back to the early 1990s when the investment firm of Scudder, Stevens & Clark developed a plan to form a Latin American power private equity business. Based on the solid returns of independent power producers in the U.S., it was believed that greater returns could be realized in the emerging markets of Latin America. This was based on three underlying market fundamentals: the privatization of the energy sector that resulted in the need for independent electrical power supply, the strong growth of local economies that created exponential growth in the demand for power and the lack of local capital to finance needed investment.
In 1993, Scott Swensen joined Scudder and with a background that combined mechanical engineering, private equity, financial, and operational experience, he assumed the Lead Investment Manager role for the Scudder Latin American Trust for Independent Power (now Latin Power I). The fund successfully raised $100 million from major strategic and financial investors and adopted a mandate to take minority interests in power plants undergoing privatization across the region.
The experience and success of Latin Power I led directly to the creation of Latin Power II. By 1998, the group closed on this second fund with commitments of $157 million and an investment strategy similar to Latin Power I. However, as a result of a less competitive investing environment and the opportunity to realize greater value from controlling positions, the fund shifted its strategy. The team began to take majority interests in power facilities giving them the authority to effectively oversee operations.
With a broad mandate, talent was required to evaluate opportunities and manage portfolio investments. Scott aggressively recruited and in 1995, George Osorio joined the group, enhancing the overall capabilities with strong corporate finance and M&A expertise. By the launch of Latin Power II, the team had sufficiently expanded to include several other professionals who now comprise the Conduit team.
Change in Corporate Ownership
In 1997, the Scudder organization was looking for an outside global, strategic partner to help expand its significant international business. At year-end, the process culminated in Zurich Financial Services acquiring majority control of Scudder and merging it into its Kemper Investment Management franchise to create Scudder Kemper Investments – a business that was renamed Zurich Scudder Investments two years later.
By September 2001, yet another change in ownership took place. Deutsche Bank reached an agreement to purchase Scudder, an acquisition that was completed in April 2002. The Latin Power group became part of DB Capital Partners and its significant private equity franchise. Several months later, however, Deutsche Bank made the decision to stop sponsoring private equity funds.
Launch of Conduit
With a skilled and highly cohesive unit in place, the formation of Conduit Capital Partners became the natural platform to ensure a smooth transition for clients and continue a commitment to Latin Power investing. After establishing a reputation in the Latin American power industry over more than ten years, Conduit is poised to build on its record and pursue additional opportunities with a heightened sense of pledge and purpose.
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