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Tuesday, Nov 29, 2022

Bhathal Family Revamps Investment Platform

Newport Beach’s Bhathal family, best known for apparel manufacturer Raj Swim and as co-owners of the NBA’s Sacramento Kings, said they are shifting their family office into a new scalable investment platform open to outside investors.

Their family office, Raj Capital Managing Partners, recently unveiled a platform dubbed Revitate to focus on the three of the investment verticals it knows best: real estate, sports and consumer.

“We want to channel our family’s insights and expertise into larger-scale economic, financial and social impact,” Alex Bhathal told the Business Journal.

Its goal is to reach several billion dollars of assets under management.

The platform is working with “talented emerging fund managers” to develop exclusive private equity fund opportunities for alternatives-focused investors.  

When asked why they would move from a family office to a larger investment platform that could face more public scrutiny, Alex and his sister Lisa Bhathal Merage said they enjoy the challenge.

“We’re not cut out to play golf,” Lisa Merage said. “We have a growth mindset.”

“We’re business builders,” Alex Bhathal added. “We love to work. We love to build businesses. We love competition.

“It’s exciting to us to grow businesses and help entrepreneurs achieve their visions.”

Profits into Real Estate

Raj Bhathal, who emigrated from India in 1960, and his wife, Martha, in 1967 founded swimsuit maker Raj Manufacturing Inc.

The family often took their profits and invested in real estate, Alex Bhathal said.

In the 1990s, they started dabbling in professional sports, most notably the football team Orlando Thunder of the World League.

As part of a family succession plan designed to let their parents retire, the siblings in 2006 led a private equity-backed buyout of the company, and took over operations of the company, which later changed its name to Raj Swim. In 2016, they sold their stake in Raj Swim for an undisclosed amount to a private equity firm. The apparel company has since been brought back under the family fold.

The siblings in 2006 began their family office to manage their investments.

Alex Bhathal is Revitate’s executive chairman and managing partner, while Lisa Merage is its chief impact officer.

“Our parents instilled in us the value of giving back to the community,” said Merage, whose husband, Richard Merage, runs another notable family-backed investment firm in the area, MIG Capital. “Impact is a way where we can find quantifiable and measurable ways to make changes in this world that go above and beyond philanthropic activities.”

Investment Spark

The pair have hired Chief Operating Officer Kunal Merchant, who first collaborated with the Bhathals in 2013 when, as Sacramento Mayor Kevin Johnson’s chief of staff and later as an executive for the Sacramento Kings, he played a central role in keeping the Kings NBA franchise in Sacramento and revitalizing its downtown.

Besides being co-owners of the Sacramento Basketball Holdings LLC, the family was deeply involved in that city’s development of the Golden 1 Center arena, Sawyer Hotel, and Downtown Commons retail and entertainment district.

“That billion dollar investment sparked an additional $1.5 billion within a 1.5 mile radius,” Bhathal said.

Merchant subsequently advised the Bhathals on their work to generate new investments in low-income communities through their RevOZ Capital opportunity zone platform.

“We all share a passion for nurturing the potential of promising ideas and promising leaders,” Merchant said. “The possibilities for Revitate are endless, and I’m excited to get started.”

Emerging Talent

Revitate’s investment managers will receive flexible growth capital and operating support to accelerate and elevate—or “Revitate”—their success.

“The common thread is partnering with emerging managers who have strong track records and expertise and with Revitate can help them accelerate them to achieve scale,” Bhathal said.

It says it already has “rock star fund managers,” that will manage business units including:

• Revitate Cherry Tree, a new joint venture with real estate veteran Chris Marsh, founder and CEO of Newport Beach’s Cherry Tree Capital Partners.

Marsh, who until earlier this year oversaw an aggressive development and acquisition push for Irvine Co.’s apartment division, has a newly-launched multifamily investment platform that aims to acquire more than 1,000 units over the next 18 months, mostly in the Midwest and Sun Belt.

It will also pursue ground-up development opportunities in California and neighboring states.

“Cherry Tree could not have picked a better partner than Revitate to launch our multifamily housing strategy,” Marsh said. “We love the vision for Revitate and hope to be the first of many funds to find success on the platform.”

• Revitate Sports is a private equity platform to connect investors to professional sports franchises and their related ventures.

For example, an emerging trend is investors in sports teams who are also interested in developing areas near their stadiums.

“People saw what we did in Sacramento and want to do something like it,” said Merchant, who is overseeing this unit.

“How do they build out more real estate opportunities in addition to the stadiums? We can be capital partners or strategic advisers.”

Since the Bhathals were part of a group that bought the Kings for $534 million in 2013, its value has almost quadrupled to $1.83 billion, according to Forbes.

To keep up those values, the sports leagues must attract different types of investors like institutional or private equity, something that current league owners aren’t completely comfortable with, Bhathal said.

“Being able to create spaces for private equity is inevitable because you’re going to run out of those folks who can write the big checks,” Bhathal said.

• A third area where the Bhathals want to leverage their expertise is consumer brands.

For example, the Bhathals introduced Hydro, which makes rowing machines that permit a user to view scenes of world famous waters, to RX3 Ventures, a Newport Beach investment fund that was founded by Green Bay Packers quarterback Aaron Rodgers, alongside seasoned investors Nate Raabe and Byron Roth.

RX3 aims to convince athletes to invest in consumer companies rather than merely accept fees for promoting their products.

“There’s a big difference between athletes getting paid and then have skin in the game,” said Bhathal, who acts as an investment partner for RX3.

Hydro already has a valuation topping $1 billion.

“RX3 has been a great success,” Bhathal said. 

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