Family offices have for some time created subsidiaries or associate firms focused specifically on private equity and venture capital.

A spinout investment firm from Blackstone billionaire Tony James’ family office has launched a private equity fund, Bloomberg has reported. 

The fund is backed by James and other ultra-high net worth individuals, the report said.

The move fits with a pattern – as described by Family Wealth Report here – of how the worlds of family offices and private equity are increasingly intersecting. 

Madison River Capital reportedly collected about $370 million from investors including wealthy individuals and institutional money managers for buyout deals targeting small-to-medium sized US companies in the healthcare, industrials and business services sectors. Madison River Capital was launched in 2022.

FWR has asked MRC for comment on the story and may update in due course. 

The report said that James, formerly Blackstone’s chief operating officer, was an anchor investor providing about $60 million to the buyout vehicle from the New York-based firm, which is now seeking to strike a handful of deals this year. It cited comments from Madison River’s managing partner, David Wittels.

James previously oversaw his private equity investments through his New York-based family office, Jefferson River Capital, the report said. Wittels served as president before he led efforts to launch the spinoff firm in early 2022. Also in 2022, James stepped back from Blackstone after spending almost two decades there.

Family offices are working with their peers to put private market ideas into action. They realize that fund structures need to be formed to avoid problems, Mark Tepsich, family office design and governance strategist for UBS Family Office Solutions at UBS, has told FWR. Family offices have for some time created subsidiaries or associate firms focused specifically on private equity and venture capital.