Green team

By Steve Bailey, Globe Columnist  |  October 27, 2006

Big happenings at Highland Capital Partners, one of the region's premier venture firms. The Boston Celtics' nice-guy chief executive, Wyc Grousbeck, is rejoining the team, and Harvard basketball junkie Tom Stemberg is out raising big money -- at premium prices.

Grousbeck left Lexington-based Highland four years ago when he led a group to buy the Celtics. Now he is returning on a part-time basis, but says his primary focus will remain the Celtics, a place chockablock, by the way, with super-rich private equity guys. Assume Grousbeck isn't going back because he needs the money. His dad, Irving, assured the family fortune decades ago when he and Harvard Business School classmate Amos Hostetter created Continental Cablevision. "I missed the guys," Grousbeck says of his partners at Highland, where he previously worked for seven years.

As in the past, Grousbeck will focus on healthcare, but he says his buyout and operating experience at the Celtics will allow him to expand into larger deals. "A later-stage healthcare buyout would be a perfect opportunity," says Grousbeck, 45. As for the Celtics, he says: "We will be very disappointed if we are not in the playoffs."

Last year, Highland raised $800 million, its seventh fund in all but first since 2001. Managing general partner Bob Davis says Highland has barely started spending the new fund, but expects to focus on communications, information technology, and healthcare, as it always has. Unlike many other firms, Highland does everything from start-ups to later-stage buyouts, Davis says.

"We're very active right now," says Davis, former chief executive of Lycos Inc. "The marketplace is really turning quite a bit."

One thing Highland will not talk about, however, is Stemberg's fund-raising for the firm's new retail fund, Highland Consumer Fund I. Regulatory rules prohibit Highland from discussing fund-raising, but two potential investors say Highland has targeted the fund at $250 million, not to exceed $300 million. Stemberg, who founded Staples Inc., will manage the fund along with Highland's Dan Nova and a third partner.

But what has turned off some investors is the fees: Highland has set the management fee at 2.5 percent of assets and will retain 25 percent of the profits -- rich, indeed, particularly for someone like Stemberg, who has never managed a fund. Fees in the 2 and 20 range are closer to the norm. He declined to comment.

Neighborhood news

The Romney administration is moving fast on its plan to take down the tolls on the western portion of the Massachusetts Turnpike. The Turnpike Authority is soliciting bids for an investment banking firm to handle the transaction to repay about $200 million of bonds by leveraging revenue from the turnpike's service plazas. Citigroup, represented locally by investment banker Tom Green, is given the early edge, mostly because it is not UBS or Lehman Brothers, two other obvious contenders. Both those firms were involved in an earlier interest-rate swap deal that is now seen as problematic for the turnpike. Bids were due yesterday.

Bob Walsh, a Friend of Tom (Menino), is selling his real estate company, RF Walsh Project Management, to his longtime colleague, Jack Hobbs. Walsh, a former director of the Boston Redevelopment Authority under Mayor Kevin White, is also selling his construction business to John Fish's Suffolk Construction Co. Walsh, 65, will continue to consult for both companies. "This is not a retirement for me. I'm too young," he says.

At a recent fund-raiser for Mass. General Hospital for Children, Jonathan Kraft, president of the New England Patriots, paid $30,000 in an auction for a diamond necklace and earrings. He slipped the earrings into his pocket for his wife, and then handed the diamond necklace to Peter Slavin, MGH's president. Kraft's request: Have a drawing and give it to a pediatric nurse at the hospital. "I just thought it would be cool for one of them to have it," Kraft said. And classy, too.

Steve Bailey is a Globe columnist. He can be reached at bailey@globe.com or at 617-929-2902.