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Pritzker Siblings Start $300M Fund

Pritzker Siblings Start $300M Fund


Anthony “Tony” Pritzker,part of Chicago’s ultrarich Pritzker family,says he loves finding troubled companies and turning them around. Now he has $300 million to spend on his passion.

In February, Pritzker and younger brother J.B. Pritzker started Pritzker Group LLC, a private-equity firm in Seal Beach with funding from their family’s fortune.

The brothers say they plan to buy manufacturing, aerospace and technology companies here and across the country. Tony Pritzker works out of Seal Beach while his brother is in Chicago.

“I am an operations person, while my brother is a finance person,” said Tony Pritzker, the Pritzker Group’s chief executive. “I like to run companies. I like to turn around companies.”

The Pritzker family is best known for its century-old empire that includes Hyatt Corp., manufacturing and service conglomerate The Marmon Group Inc., a quarter stake in Royal Caribbean Cruises Ltd., as well as real estate and other holdings.

Robert Pritzker, head of Marmon Group, and Thomas Pritzker, who oversees Hyatt, ranked a combined No. 55 on the Forbes 2002 list of the world’s 500 richest people.

Tony and J.B Pritzker are sons of Donald Pritzker, who took the company into the hotel business. Donald himself is the grandson of patriarch Nicholas Pritzker, who came to the U.S. from Russia in the late 1800s.

The Pritzkers have other Orange County ties. They own Buena Park Mall, recently renamed Buena Park Downtown, through their Chicago-based Sunrise Buena Park LP.

And a blueprint for Pritzker Group’s strategy can be found at Seal Beach-based Baker Tank Inc., a renter of truck and chemical tanks and other gear. In 1996, the family’s H Group Holding Inc. bought Baker Tanks, where Tony Pritzker serves as chief executive.

Pritzker Group plans to buy midsize companies as long-term investments, according to Tony Pritzker. The firm plans to invest $10 million to $100 million in companies. The brothers plan to look for companies they deem to be undervalued and then turn them around.

Unlike other OC equity and venture firms, Pritzker Group doesn’t have an institutional backer in the conventional sense. All of the firm’s money is from the family.

So while most private-equity funds are focused on buying companies and then selling them a few years later, Pritzker Group can take a longer view, according to Tony Pritzker.

“We are looking at buying businesses and holding them,” he said.

The approach has parallels, albeit on a smaller scale, to what the family has done with Marmon Group, a holding company for producers of medical devices, mining gear, industrial goods, consumer products and other offerings.

This isn’t Tony Pritzker’s first private-equity play. In 1998, he started Stainless Indus-trial Cos., which has invested around $60 million in seven companies. Pritzker oversees the operations of Stainless Industrial’s companies from Seal Beach.

Pritzker, who recently qualified for October’s Hawaiian Ironman Triathlon, said his strategy for reviving companies starts with replacing managers with the best people he can find.

Then he said he gives them the “tools” they need to do their jobs. Training comes next. Lastly, “I get out of their way,” Pritzker said.

After shuffling managers at Baker Tanks, Pritzker said the company saw a boost in morale and productivity. Some $25 million in technology spending also helped, as did spending $1,500 per worker on training last year, he said.

In two years, Baker Tanks’ revenue has gone from $62 million to $90 million, he said. Profits also have improved, he said, at a time when most of the company’s rivals had a flat year.

Cash from operations went to pay off nearly $15 million in debt, he said, and bankroll the company’s technology spending.

Since his arrival, Pritzker said he’s visited 38 of the 40 U.S. offices Baker Tanks has. He’s visited some offices several times, he said.

“My willingness to get out in the field is what distinguishes us from others who manage everything from their corporate office,” he said.

J.B. Pritzker, chairman of Pritzker Group, is the deal maker of the team. In 1996, he started Chicago-based venture firm New World Ventures. Since inception, the firm, along with Chicago-based William Blair Capital Partners LLC, has raised around $100 million from institutional investors.

Tony Pritzker got his bachelor’s in industrial and mechanical engineering from Dartmouth College in 1981. After graduating, he went to work with a startup in Silicon Valley that was trying to pioneer a multi-user desktop computer. Consumer electronics maker Thomson Multimedia SA later bought the startup.

A fluent Japanese speaker, Pritzker went to Japan in 1984 to work for a computer company. After his return to the U.S. in 1985, he went to the University of Chicago for his master’s in business.

In 1987, Pritzker started working for the family business at Marmon Group, which counts more than 250 factories and 300 sales and distribution facilities. He worked there for 12 years. Several times he was tapped to turn around companies within the group.

Pritzker came to Southern California 10 years ago to turn around a Valencia medical device maker the Marmon Group had bought. He’s has been living in Southern California since, and resides in Holmby Hills near Beverly Hills.

In all, Pritzker said he’s worked full time on five troubled companies. All of them are making more money than they did before he took over them, he said.

Pritzker spends a good chunk of his spare time readying for the Hawaiian Ironman competition. He gets up at 4:30 a.m. every day, he said, and “by 5:15 I’m in the pool.”

After swimming, comes a couple hours of more training, he said. Pritzker boasts that he ranks in the top 10 percentile in most of the triathlons (he placed No. 10 in Huntington Beach’s “A Day at the Beach” triathlon series in August). He said he averages slightly less than eight minutes a mile in marathon races.

By 7.30 a.m. or so, Pritzker said he starts on his 45-minute drive to Seal Beach.

“That’s what cell phones are for,” he said.

Pritzker’s assistant, Judy Schroffel, estimates that he puts in 10 to 12 hours of work each business day.

Pritzker said he tries to get home every night for dinner with his wife, Jeanne, and four children, Nicholas, Elizabeth, Sacha and Jenny Kate.

Pritzker also is membership chairman of the Los Angeles chapter of Young Presidents’ Organization, and just finished a two-year term as the president of Heal the Bay, a Santa Monica-based group that promotes clean coastal waters.

In May, Heal the Bay is set honor Pritzker with its “Walk the Talk” award for his contributions to the group.

He’s also on the board of the National Association of Manufacturers and regularly participates in events of the Jewish Federation Council of Greater Los Angeles. His favorite extracurricular activity: helping his son raise money for his school, he said.

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