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Hank Greenberg's Starr to Seek Outside Investors to Fund Private-Equity Deals

Posted on 25 May 2012 by Neilson

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Maurice “Hank” Greenberg, former head of American International Group Inc. (AIG), plans to seek outside investors to help him fund private-equity deals lasting a decade or more.

Starr Cos., a New York-based group of insurance and financial-services companies Greenberg oversees, placed one of its private-equity businesses in a subsidiary that registered with the U.S. Securities and Exchange Commission last month, filings show. The unit, Starr Principal Holdings LLC, said it plans to raise money as needed from institutional investors such as sovereign-wealth funds and ultra-high-net-worth family offices, without specifying how much.

AIG (AIG) began investing insurance assets in private equity during the 1980s and ramped up the activities in the mid-1990s, in part by taking a stake in a fund run by a former interim prime minister of Pakistan. Greenberg started building a new private-equity business after leaving AIG in 2005, with plans to hold some investments at least 10 years and to give clients the right to choose which deals they participate in.

“Hank has always been a smart buyer and builder of companies,” said Peter Yu, the former president of AIG Capital Partners Inc., set up by the insurer to make private-equity investments in emerging markets. “People tend to think of private equity in the narrow buyout-related terms of a Henry Kravis or Mitt Romney, but more generally it’s simply about building businesses.”

Kravis is co-founder of KKR & Co. and Romney, the Republican presidential candidate, helped start Bain Capital LLC. Yu is now managing partner of Cartesian Capital Group LLC in New York.

Starr Principal is run by Hank’s youngest son, Scott Greenberg, who began his career at Bankers Trust Co. and has more than 20 years of private equity experience, according to the parent company’s website. Starr Principal’s merchant banking operations are headed by Geoffrey Clark, a former partner at Goldman Sachs Group Inc. who co-founded the private-equity operations within the bank’s asset-management arm.

Greenberg has been building up Starr’s investment and insurance operations since he resigned from AIG in March 2005, ending an almost four-decade reign at the helm of what was then the world’s largest insurance company. The SEC and former New York Attorney General Eliot Spitzer were investigating AIG’s accounting practices at the time, and four years later, Greenberg agreed to pay $15 million to settle SEC accounting allegations without admitting or denying guilt.