Private equity firm names: A brand apart

Six months before announcing the spin-out from its parent, Axa Private Equity formed a group comprising representatives from the communications and corporate departments, senior management and two external PR agencies. Their task: to come up with a list of possible names for the newly-independent entity.

There were two guiding criteria. First, the name should start with the letter A, acknowledging the company's heritage as part of Axa Group. Second, from a linguistic perspective, it should be rooted in Europe.

"Many large PE firms are from the US. We were born in France so we wanted to go for European languages. We considered Latin but then decided to look at Francique, the language of Northern Europe. We wanted a name that had meaning for ourselves - a name that said something of who we are," explains Jérémie Delecourt, head of corporate & international development at the company now known as Ardian.

A list of 100 options was whittled down to ten and then a final three, from which senior management selected their favorite. Ardian derives from the centuries-old word "hardjan" and embodies a sense of courage and code of honor. The name's meaning was cross-checked in Arabic and Chinese, and as a final step, the firm ran their choice past a couple of LPs.

A global game

Naming private equity firms used to be a reasonably straightforward process. Kohlberg, Kravis, Roberts & Co, as it was originally known, was named for its founders; The Carlyle Group's founders named their firm for the New York City hotel in which its formation was often discussed. Others looked to nature - plants, rock formations and water features - in order to convey a sense of stability, growth and renewal.

However, as the Ardian process suggests, times have changed, globally and in Asia. These have become bigger, more public decisions for a bigger and more public asset class.

"Private equity is growing globally, so we are seeing different behavior in terms of branding and marketing," says Matthew Stotts, founder of Tenor Partners, which helps PE firms develop marketing strategies. "Private capital markets have become much more competitive and so PE and VC firms are under pressure to establish a presence and win deals in target markets. Branding strategies become much more critical in times like these."

Establishing a brand that is both credible and recognizable is also important from an investor perspective. Private equity has moved into the mainstream as an asset class and this institutionalization has several consequences.

First, it invites greater regulatory scrutiny, which places firms in the public eye, stimulating greater awareness of image management. Second, it creates an industry dynamic in which large firms are becoming larger, introducing products across multiple asset classes. A powerful, unified brand can be helpful in this context. Third, the asset class is gradually moving from a pure institutional client base to one that includes an element of retail participation. This in turn is likely to require broader and more commercial marketing efforts.

"More savvy firms are creating engaging brand names that resonate with potential audiences, provide a simple domain name, and invite further dialog - a continuing conversation that speaks to the company's core value proposition," says Phil Davis, founder of corporate naming and branding firm Tungsten.

He previously worked with a US-based M&A firm that wanted a new name as part of efforts to re-positioning as a transaction advisor and also to connect at a higher level with clients. Davis discovered the firm had four major partners, and lived in a city with four major rivers, which connected everything and everyone in town. He came up with the name FourBridges Capital.

"The word ‘bridges' is a metaphor for connecting customers and capital. The word ‘four' provided a backstory to the founders. Both create immediate topics for discussion," he explains.

Though relatively young in private equity terms, Asia is part of this global evolution. But there are also regional nuances on the naming side. Private equity firms are operating in markets in which local people might not only struggle to communicate in English but also lack familiarity with Romanized character systems. Finding a name is often a multi-layer process that has to strike a balance between the needs and limitations of various stakeholder groups.

In some respects, finding a Western name is no different for a firm in Asia than in Europe. Leveraging the parent company's name is a classic strategy.

Headland Capital Partners, which spun-out from HSBC in 2011, was in a similar position to Ardian: the new name had to begin with H. "We wanted to retain the link with our former parent," says Marcus Thompson, Headland's CEO. "Starting with H also simplified the selection of names! If we had tried to find a name starting with any of the 26 letters, it would have made the process a lot more challenging."

Headland bought in a consulting firm, which drew up a dozen options based on the attributes the 16 partners said they wanted to convey. This was followed by a vote and Headland was the unanimous choice. The internal view was that the name projects a positive image of the firm - a rock outcrop extending into the sea, bathed in pleasant weather. However, there is also a military connotation: capturing a headland allows an army can seize a strategic advantage.

"It's a vantage point from which a general is able to see what's going on around him and plan accordingly. The same is true for private equity. We're a long-term investor, and we want to see what's going on around us and develop a vision of what sectors will be the best performers before we invest in them," Thompson says.

Not all Asia spin-outs have followed the Ardian and Headland model. Affinity Equity Partners and Unitas Capital were among the first generation managers that uncoupled from investment banks in the early 2000s. Their names no longer have any relation to the former parents, UBS and J.P. Morgan. These differing approaches might be explained by the relevance of the name to the target market. HSBC has a retail banking business and strong brand name recognition throughout Asia.

Certain groups that remain captive also draw on the reputations of their parents. Intel Capital and Google Ventures are obviously tech specialists; CITIC Capital, which targets state-owned enterprise (SOE) restructurings, relies on the brand cache of its parent, CITIC Group, when dealing with SOEs; and CICC Private Equity might be popular among IPO-hungry entrepreneurs because of its ties to China International Capital Corp, a leading domestic brokerage.

Chinese challenges

In this context, finding an appropriate Chinese name is also important. The first character of Headland's Chinese name is the same as that of HSBC. But the name in full - "Hui Rui," meaning a combination of talents - was picked for its applicability to the PE firm's cause. Ardian was told by a Chinese financial institution that its English name sounds like an animal that symbolizes happiness and good luck in the Chinese mythology. The animal now features in its Chinese name, "An Lin."

For many of the local Chinese private equity firms, the Chinese name came first and they wanted something of similar meaning or pronunciation in English. This is the case for Hony Capital and FountainVest Partners, as well as VC players Ceyuan Ventures, Qiming Venture Partners, and Banyan Capital.

"Smaller PE firms or the traditional VC firms might only have 15 LP relationships, 30 at the most. That is manageable through face-to-face relationships and so the name isn't so important for LPs. But it is very important for the markets they invest in - for generating qualified deal flow, for attracting management teams, for increasing market presence, and for being differentiated from other firms," Tenor's Stotts says.

When Qiming was founded in 2005, co-founder Gary Rieschel delegated responsibility for coming up with a Chinese name to his wife Yucca, a Hong Kong native. She organized a dinner to discuss options with friends and finally proposed Qiming. "Qi" - which is often found in the names of publishing companies in Hong Kong - means to enlighten or inspire. It has elements of scholarship and mentorship, and when combined with other characters, can reflect innovation.

"Both our kids have Qi in their Chinese names, and we were joking this was our third child" Rieschel says. "There was also a feeling that it showed purpose and weight. And, while a very Chinese name, it is not too difficult for foreigners to pronounce. Finally, we chose the traditional characters because [co-founder] Duane Kuang and I agreed that the aesthetics were better."

FountainVest's name was not decided until one month before the final close of its debut fund in 2012, after long debate. The team decided it wanted a link with water, one of the five elements - known as the "Wu Xing" - in Chinese philosophy. There were several reasons for this.

"One is that in China, water is often associated with money and fortune. Water also quietly helps everything grow, a role that we see for ourselves with companies we invest in," Frank Tang, CEO of the PE firm, explains. "In addition, ‘fang yuan' means source of water in the country of China. We then added ‘Vest' to the English word ‘Fountain,' a translation of our Chinese name, to produce FountainVest."

Elements of other PE firms' names are taken from Chinese classic works - known as the Four Books and Five Classics - that illustrate the core value and belief systems in Confucianism. John Zhao, CEO of Hony, took "Hong Yi" from a piece of Chinese calligraphy displayed in the office of Legend Holdings CEO Chuanzhi Liu. Hong Yi is a Confucianism saying that implies people should work hard to achieve, with a long-term vision.

Most firms seek advice from a Fengshui master on a name. According to Yeetak Choi, a Hong Kong-based Fengshui master, a name should be balanced with the founders' lives. For example, a person's date of birth and the time at which they were born can be cross-referenced with the Wu Xing. If there is not strong balance across the five elements, a name will be suggested that represents the missing element.

"We not only consult the Wu Xing, we also look into the pronunciation of the name and its underlying meaning, and whether it could bring good thoughts to people. If the words are good, it sounds like a blessing when you call out the name. We believe this could bring fortune to the business," says Choi.

In perhaps the most striking endorsement of a private equity firm's Chinese name, the Fengshui master Vision Knight Capital consulted ended up investing in its fund.

The firm, co-founded by former Alibaba Group executive David Wei, is known as "Jia Yu" in China. The "Jia" is taken from the Chinese name for Kerry Center, the Shanghai building in which Vision Knight has its headquarters. "Yu" comes from neighboring building's name. It is a reminder that one should never forget one's birth place, while the combination of the two characters means "better managing the horse" - a metaphor for operational improvement.

The English name Vision Knight bears no relation to the Chinese; Wei just picked two words he liked. FountainVest's name has a similar basic meaning in both languages. Unlike Qiming or more recent creations such as Boyu Capital, the managers declined to use the pinyin versions of their Chinese names as their English names.

CDH Investments, which spun-out from CICC in 2002, was also reluctant to do this. The firm is known in Chinese as "Dinghui." The "Ding" points to the three-legged urns used to burn incense in Chinese temples - a character that denotes stability. "Hui" means the first ray of light before the sun rises. It was devised in house, with a Fengshui master confirming the name had the right number of character strokes.

"At the time, there weren't many home-grown PE firms in China. Some used the pinyin version of their Chinese names and didn't pick an English name," explains Stuart Schonberger, managing director at CDH. "We rejected the pinyin of Dinghui because it doesn't sound good in English. The word ‘ding' has negative connotations and it didn't make sense to take any risks with a creative name when no one knows who you are."

The stars align

There are a few examples in India's private equity community of firms tapping into local culture like their Chinese counterparts. Kalaari Capital, which was known as Indo US Venture Partners until 2012, found inspiration for its name in a form of martial art. In North Asia, the vast majority of firms are named after the financial institutions from which they originated. In many cases, they are still wholly captive; those that are not like the credibility the brand brings.

It is perhaps surprising that Japan, where the kanji script is based on Chinese character sets, has not seen the same naming trends as China. The separate phonetic alphabet - katakana - is one reason for this. It allows direct phonetic use of English or other languages. For example, Advantage Partners' name is simply written in Katakana, rather than using kanji.

Other firms refrain from using traditional Japanese characters. When the group now known as J-Star was coming up with a name, one partners suggested using something along the lines of "Japan Buyout" in Japanese characters - "Nippon Baiautto Toushi." But Greg Hara, director and president of the firm, thought this sounded too stuffy, so looked for English name.

"Most of the people we deal with understand basic English, so ‘they get that J' stands for Japan and ‘Star,'" Hara explains. "Our model is solution capital and our target companies have to shine like stars. Companies might be small stars or large stars but we want each one to shine."

The firm had to endure some teasing in the early years. J-Star was set up by members of Jafco's PE team and industry participants - mistakenly but in jest - said the name meant they were "Jafco's star team members."

One area in which Asia differs fundamentally from traditional Western practices is incorporating the founders' names into the firm name. It has happened in only a handful of cases. From a Chinese perspective, this reluctance is perhaps explained by the perception that prominent business people are easy targets in government crackdowns.

"It might be a cultural thing in the sense that people value their privacy, particularly in the case of China's princeling funds where there is a desire to hide connections," one Asia-based LP observes. However, he notes that using founders' names was characteristic of US private equity in the 1970s, 1980s and 1990s. Now they prefer initials.

Another consideration that applies to all firms regardless of geography is the need to create a sustainable PE franchise with a deep bench of talent. Highlighting 1-2 founders in a firm's name does not send out the right message. Tungston's Davis adds that it takes years to imbue a founder-named firm with meaning, while removing or removing people can be problematic.

No one wants a name to become overcomplicated - not when operating in an asset class that is increasingly globalized as well as institutionalized. A name that is short, simple and easy to pronounce or translate will inevitably have the most cross-border currency. Sino-US VC firm Granite Global Ventures rebranded itself as GGV in 2007 for this very reason.

"If you have the opportunity to name your firm, you should think about the global market, your long-term strategy, and the types of companies you want to attract as well as current and future LPs. All of these components should be factored in choosing a compelling name that would be relevant with all of your audiences," Tenor Partners' Stotts says.

At the same time, a private equity firm could take on almost any name and still attract capital from LPs if there is strong performance. GPs are simply advised to avoid causing offense or taking someone else's name, and just try to convey broad institutional qualities. Entrepreneurs, too, are smart enough to look past the brand to the people and processes that shape a firm.

"Over the last 5-10 years, we've seen people being more creative, coming up with interesting and playful names for the new firms," says Jeff Richards, who joined GGV in 2008 after spending 13 years as an entrepreneur in the US and Asia. "But ultimately, entrepreneurs want to work with a firm that's successful. Everybody loves the name Amazon. But if Amazon were a terrible company, nobody would like the name."

Go West: What's in a name?

Two months ago, London-based Isis Private Equity announced it would change its name to avoid associations with the terrorist activities of another ISIS - shorthand for The Islamic State in Iraq and the Levant. It is an unfortunate and impossible-to-foresee outcome for a firm originally named after an ancient Egyptian goddess.

When looking for a replacement, Isis might do well to avoid the realms of ancient myth and legend. Fund managers have already snapped up virtually every Egyptian, Greek and Roman deity in the pantheon. Sanskrit and Latin are becoming popular almost by necessity.

Branding agencies are often called in to help out. Phil Davis, founder of US-based corporate naming and branding firm Tungsten, says the naming processes usually goes through five stages: discovery, concept, refine, winner and market.

"We start by helping a company determine its ‘pivot pints' - that singular attribute around which their services revolve. This could be protecting, connecting, enhancing, or building. Once a client has a better sense of who they are as a company, we can then determine the best naming strategy to convey that key benefit," he says.

After meeting with key stakeholders in the firm, a consultancy firm will reduce the initial hundreds of candidates to 8-12 that meet all the branding criteria. They must convey the right message, have an available trademark and domain name, and provide a marketing platform. "There is a wide assortment of naming strategies for consulting firms, such as coined or invented names, positive connotation names, metaphors, and descriptive hybrid names," Davis says.

Abstract and invented brand names in the PE space include Accel, Sigma Partners and Meritech Capital Partners. They are favored by trademark attorneys because of their un-established nature. However, significant time and investment is required to imbue with meaning, says Matthew Stotts, founder of Tenor Partners.

Private equity firms that want to avoid the abstract or mechanical gravitate towards nature. Sequoia Capital and Oaktree Capital are cited as names that are grounded and approachable, yet convey growth.

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• Topics
• Greater China
• North America
• North Asia
• GPs
• GPs
• Asia
• China
• Japan
• India
• Headland Capital Partners
• Hony Capital
• CDH Investments Management
• Fountainvest Partners
• J-Star
• Ardian
• Vision Knight Capital