NEW YORK: The Raine Group may not be as instantly recognisable as Wall Street fixtures like Goldman Sachs and Morgan Stanley.
But the small merchant bank helped Steve Ballmer buy the Los Angeles Clippers, invested in Vice Media and advised the Japanese telecommunications giant SoftBank in its takeover of Sprint.
And in December, the firm claimed yet another big transaction, selling a stake in the parent of the Manchester City soccer team to a group of Chinese investors at a $3 billion (Dh11.01 billion) valuation, one of the highest in the sport. Raine’s role has not been previously reported.
Over just six years, Raine has become a top player in the world of media and telecommunication deals, helping to both create transactions and, in many cases, take a piece of them as well. And that has earned the firm an enviable list of clients who frequently turn to the bank for their deal-making needs.
“There’s always a fresh idea you’ve never seen,” James Murdoch, chief executive of 21st Century Fox, said in an interview. “They’re able to bring a lot of creativity to the table.”
In setting up Raine, the firm’s founders, Joseph Ravitch, 53, and Jeffrey Sine, 61, followed in the footsteps of other veteran investment bankers who left established Wall Street banks to strike out on their own. Forgoing the big trading desks that provided so much revenue for their former employers, these bankers — from Kenneth D. Moelis of Moelis & Co. to Paul J. Taubman of PJT Partners and Aryeh Bourkoff of LionTree Advisors — instead focused largely on advising on deals.
But Ravitch and Sine added a wrinkle to the model by investing in venture capital-type transactions as well as arranging them. The roughly 75 professionals at Raine divide their time about equally between devising potential deals that they could bring to their clients and finding investment opportunities for the firm itself.
“Our competitive advantage is to get deeper” into media and entertainment deals, Sine said in an interview at Raine’s New York City offices.
That does not always translate to lofty rankings of deal-makers. As of September 30, Raine did not make Thomson Reuters’ list of the top 50 mergers advisers last year. Yet the firm argues that it does not make many pitches for new business, instead working closely with clients on potential transactions.
“We’re not ambulance chasers,” Ravitch said. “Most of our advisory assignments are repeat business.”
The firm has suffered some bumps along the way. One of its signature investments, the daily fantasy sports start-up DraftKings, has taken several blows in recent months as state regulators have investigated whether the company and its rival FanDuel are operating illegally. A New York appeals court judge has allowed the two to operate in the state until at least Monday.
Few could have foreseen Raine’s birth. For years, its founders were bitter rivals — Ravitch at Goldman, Sine at Morgan Stanley and then UBS — who clashed repeatedly during deal negotiations across the world.
The two men differed in more than who signed their paychecks. Ravitch, who in the interview sat back in a company chair, wearing an open-collared dress shirt, is the well-known liberal son of Richard Ravitch, a prominent Democratic politician who served as lieutenant governor in New York. And Sine, sporting a blazer, jokingly refers to himself as a Marxist, belying his near-exclusive donations to Republicans.
(Sine has also forged a second career outside of deal-making: producing Broadway shows like “Beautiful: The Carole King Musical.”)
Yet the two eventually formed a fast friendship, so much so that during a fishing trip on Long Island, New York, in 2007, Sine found himself with an abundance of striped bass — and showed up at his rival’s doorstep, bearing a few hefty fish to share.
“In the late ‘90s, we were our main competitors,” Joseph Ravitch said. “Our relationship went from trying to kill each other to mutual respect and friendship.”
Eventually, the two bankers came to agree that they could do business differently than they had done over most of their careers.
“We found common cause because we saw the advisory business as being an idea driver and a relationship driver,” Ravitch said.
Brandon Gardner, 41, president and chief operating officer of Raine, added in an interview, “We were purpose-built as a merchant bank from the beginning.”
By 2009, the two had pooled their contacts lists and formed Raine with the help of a longtime client and friend, talent agent Ari Emanuel of what is now the WME agency.
Raine’s very name is a portmanteau of “Ravitch,” “Sine” and, reportedly, “Emanuel.”
Those connections have opened seemingly innumerable doors ever since. Raine helped Ballmer buy the Clippers for $2 billion, breaking records for the NBA in the process. The bank invested in Vice as it ascended into a multimedia empire now valued at over $4 billion.
Raine has also taken stakes in Jimmy Buffett’s Margaritaville and Zumba Fitness; advised WME on its acquisition of the IMG agency; and negotiated the sale of a 20 per cent stake in Imax’s China business.
The sale of a stake in City Football Group, the owner of Manchester City, in some ways highlights how Raine operates. Ravitch had known Li Ruigang, a top Chinese investor in media and entertainment deals, since his days running Goldman’s media deals in Hong Kong when he frequently visited Li in Shanghai.
After setting up Raine, the banker stayed in touch, offering his insights into investment opportunities for Li’s current firm, China Media Capital. The Chinese investor forged even closer ties to Raine, with Li becoming an adviser to the merchant bank.
Then, about three years ago, Ravitch introduced Li to Shaikh Mansour Bin Zayed Al Nahyan, Deputy Prime Minister and Minister of Presidential Affairs, who owns City Football, at an annual meeting of Raine’s investors.
The aim was to help the soccer team operator expand its presence into China and become one of the most prominent soccer franchises in the country.
In the last six months, Shaikh Mansour and Li negotiated the sale of a stake in City Football to China Media, with Raine working on behalf of the soccer organisation.
“They knew how to guide us and put together a deal that was suitable for both sides,” Li said in a telephone interview.
What emerged was a huge transaction, with China Media and its partners paying $400 million for a 13 per cent stake in City Football. That put the value of City Football — which also owns the New York City Football Club soccer team and Melbourne City Football Club in Australia — at $3 billion, making it nearly equal to the better-known Manchester United. Li said that China Media would continue to work with Raine in finding investment opportunities.
“I think we are looking for more and more deals outside of China, so we need a partner, and we need someone who has expertise and mutual trust with us,” he said. “Their expertise can help us.”
— New York Times News Service
