Marjorie Magner is a rara avis--not only a female partner in a private equity firm but also a cofounder of that firm, Brysam Global Partners, which easily raised $1 billion in capital, quickly invested about half that in financial companies in Russia, Mexico, and India, and began to prosper. Then last June, some 18 months after she and Robert B. Willumstad had started Brysam, he walked out. American International Group, the troubled insurance giant where he was nonexecutive chairman, had tapped Willumstad to be CEO.
Suddenly, Magner--who had encouraged Willumstad to take the AIG job--seemed headed for the endangered-species list. When a "key man," in industry parlance, like Willumstad leaves a firm, investors usually gain rights. They can pull the plug completely and force a firm to close; they can send it into hibernation, stopping new investments but allowing it to manage existing deals; and they can renegotiate--down--the fees the business charges for managing their money.
For a key man to depart so early in a firm's life is unusual, and for a key man to leave a "key woman" in control is even more uncommon. Magner, 59, having risen over the years to chairman and CEO of
When Magner left Citi in 2005, after disagreements in strategy and approach with Citi's then-CEO, Charles Prince, she said that she wanted to leave the financial world. Her mother had just died; then Magner was hit by a taxi and spent weeks in bed recuperating. She didn't know what she wanted to do. It was only the prospect of partnering with Willumstad, the former Citi president and COO, who also left in 2005, that drew her back to finance. Now she was in the thick of it, alone at a time when a credit crisis was shaking many larger private equity concerns.
In Brysam's offices--on the 35th floor of a Park Avenue tower in midtown Manhattan--Magner exudes a friendly, low-key confidence. Dressed in a conservative black suit, with a burnt-orange flower brooch on the jacket, she introduces herself as Marge. Her handshake is soft; her voice is, too. She's the daughter of a policeman and a teacher, and she shows no pretenses.
With a little prompting, Magner recalls her early days in the work force, which she entered after graduating from Brooklyn College and earning a master's in industrial administration from Purdue University. She was hired by Chemical Bank's Robert Lipp, who rose to become its president and later held several top posts at Citi. Lipp had been looking for a woman to join his team at Chemical (which is now part of
This was the mid-1970s, and banking was not exactly hospitable to women. "You just had to tough it out," Magner says. There were times when she wasn't invited to important meetings; but she became friends with several executive assistants, the only other women in the office, and they would let her know when she was being excluded. "I would walk into meetings and say, 'I know you meant for me to be here.'"
Magner concentrated on getting her job done well. She tried hard to get along with people and to "not be threatening in any way"--not always successfully. "I did occasionally throw my notebook on the table and walk out of a meeting, saying, 'I'll do it myself,' because people were being difficult," she remembers. Yes, there were negative consequences, mostly in the form of buzz that she was hard-edged and unrelentingly ambitious. But Magner says the downside never outweighed the possibility of succeeding. It was a risk she was willing to take because, she explains, "I always felt I had the support of my management."
Passing through this crucible, Magner gained confidence and learned not to undermine her own chances, as, she contends, many women do. "I have yet to meet a woman who, when presented with a stretch assignment, will not have the first thing out of her mouth be along the lines of 'I don't know if I'm ready.' That causes doubt about her. No man would say that. He would say, 'Absolutely, sign me up.'" Magner says a culture that prompts women to question their abilities is the culprit here, not women themselves. "My advice is 'Zip it.' The urge to doubt yourself will pass. Say 'Thank you.' You have to push yourself past your comfort zone."
Magner met Willumstad at Chemical; in 1987, she followed him and Lipp when Sanford I. Weill recruited both men to a consumer finance company called Commercial Credit, which he merged with Primerica and then Travelers Corporation and then Citi. She thrived there--"Sandy only cared about getting the job done," she says--until Weill handed off to Prince in 2003.
Looking back at Citi, Magner isn't surprised that Prince, a lawyer whose tenure produced huge losses, was forced out in autumn 2007 (succeeded by Vikram S. Pandit). Happily, she sold all her stock right after she departed the company--given all the financial turmoil, Citi is trading at lows not seen in over a decade--and she just shakes her head about its future under the current regime. She doesn't know Pandit personally, and says, "I don't know what course he's on." And that's all she'll say.
Out on her own, Magner didn't do much for a few months. Not surprisingly, she decided to share office space with Willumstad, who was also jobless. Except for a few invitations to become a director (she sits on the boards of
But it was only a matter of time before they did the obvious thing. "We said, We love to build businesses, to run businesses. Why join another place, why not do one of our own?" she says.
Both executives felt that there was a vacuum in the private equity field for "real operators"--hands-on investors in consumer financial services companies, especially in emerging economies--a statement outsiders say is somewhat exaggerated. But with their connections, raising money was not difficult; both know JPMorgan Chase CEO James Dimon very well, and the bank contributed more than $500 million to Brysam. That greased the wheels for others to follow. (Magner declined to name or even categorize other investors.)
When Willumstad left for AIG, Brysam had committed about half its capital to five investments, including a large minority stake in Ixe Grupo Financiero in Mexico, a stake in a financial consulting firm in India, and a 10 percent piece of Russia's Vozrozhdenie Bank, which wants to move more deeply into consumer banking. When that deal was announced in February, Dmitry Orlov, the bank's chief, was quoted as saying, "I asked Mr. Willumstad to give his consent to his nomination to the bank's board of directors. I am glad to say that he has agreed."
Magner is now attending Vozrozhdenie's board meetings in Willumstad's place, and may be asked to stand for election next year. And that's the pattern: Brysam has not lost capital or made any changes to its charter. Nor has it changed its fees.
"It's because of my reputation--that goes a long way," she says. "Our focus, our strategy, is doing what I have done for decades. It's my history and my experience, and people know it."
Her biggest backer agrees. "We've worked with Marge for years, and her background is certainly phenomenal for what we are looking to see as an investor," says Heidi Miller, a top executive at JPMorgan Chase who oversees international investments, including Brysam. "We feel very comfortable." Miller--like Dimon--has known Magner "for decades."
Magner says there's another reason for the investor confidence: "When we go to meet people, I try to make them comfortable and they like me." Brysam is not a passive investor; it goes in planning to shake things up and expand. That's where being a woman who can assuage fears may be helpful, Magner says. "When we are talking, in what you could call the courting process, a lot is based on comfort. I know how to make people want to do things together."
On that score, few women are put to the test in private equity: It's essentially a closed club of men, with only a handful of women partners or managing directors, like Sandra Horbach and Karen Bechtel of the Carlyle Group. "You hire people you know, and mostly private equity is run by investment bankers, with former CEOs brought in to be industrial experts," Magner says. "There are still not a lot of women in those places." It has also been easier for men to start their own private equity firms; in terms of raising money, women are still seen as lacking credibility.
Magner doesn't expect change to come soon, largely because when there are downturns in the financial services business, as now, women, who tend to be lower on the ladder, are often disproportionately represented on the cutback rolls.
Magner is the only managing partner of a professional staff of eight, including three women. Stretched a bit thin over the last six months, she recently hired someone to work with her, though in this case her choice of a man might be forgiven: She recruited Robert Lipp as a senior partner. He will help manage the investments, leaving her a bit more time for managing the firm itself, gathering market intelligence, and traveling to seek deals. Brysam has several possibilities in the pipeline.
The crisis on Wall Street, at press time, had not materially affected Brysam, though Willumstad (who had remained a senior adviser to the firm) lost his job at AIG when the firm was bailed out by the government. Magner says she can't say whether he'll return to Brysam, but won't rule it out. For now, she continues as Brysam's top gun.
It's true that Brysam probably does not need to raise additional funds; nor has it tried to monetize gains by selling out or taking its investments public, a move that typically takes place four to six years after the original investment. Either one could test Magner's mettle as the sole managing partner. But, for now, Brysam seems to be humming, and Marge is in charge.