Three friends who have worked together in technology and financial service firms in Milwaukee, California and Chicago recently formed a new Milwaukee-based private equity group named Service Equity Inc.
Milwaukee-based Service Equity currently owns majority or significant interests in seven companies. Most of Service Equity’s portfolio companies are in financial services and technology, but the firm also owns two companies that deal in real estate and an interest in a hybrid (electric and gas driven) boat manufacturer.
Service Equity recently acquired 51 percent of RCL Partners, which owns interests in National Resource Group LLC, a national insurance marketing organization headquartered in Parrish, Fla., and Vision Boatworks, a hybrid boat manufacturer based in Pinellas Park, Fla.
Terms of the acquisition were not disclosed.
Service Equity’s most-established portfolio company is Service Financial LLC, a financial services company that offers commercial lending, residential mortgages, title, insurance, technology and other products.
Service Financial has about 30 employees and operates from offices in Milwaukee and Whitefish Bay. The company also uses about 40 independent contractors who work from offices around the country.
Service Financial recently hired three new employees.
To date, the group has financed its purchases with the personal funds of its three partners: Chip Pieper, John Stevens and Jean-Marc Krikorian. Service Equity is now raising a fund of up to $50 million to help it make future acquisitions, Stevens said.
“Our mantra is 40 (companies) in five years,” Pieper said. “We’re aggressive and bullish on what we can do in this particular space. We’re almost a quarter of the way there.”
After a fund has been raised, Service Equity will focus on using technology in the financial services sector, Pieper said.
For example, 1003 Goldmine, one of Service Equity’s portfolio companies, is developing unique software that will enable loan originators to aggregate financial information from applicants to determine the types of life insurance, annuity or mortgage term insurance might be most appropriate for them. 1003 Goldmine is now finalizing the product design, and it will likely roll out by the fourth quarter of this year.
“The fund will center on innovation in the financial services sector, leveraging IP technology and financial services that differentiates our services,” Pieper said.
Service Equity will invest between $1 million and $5 million in equity with each acquisition. The group will look to purchase privately held companies, divisions of larger firms or fund recapitalizations of privately held or family companies.
Milwaukee’s strong tie to the financial services sector makes it a perfect home for a private equity group with Service Equity’s focus, Pieper said.
“One of the key things is that Milwaukee is like one of the best kept secrets within the financial services sector,” he said.
Pieper, Stevens and Krikorian do not have experience in private equity or investment banking, but they say their experiences in the financial services and technology fields give them a unique perspective in the niche they want to build.
Service Equity is negotiating with several firms it may acquire, which would complement the existing financial services firms it currently has, Pieper said. The company is most interested in adding an accounting firm to its services, he said.
“Acquisitions are like enablers, to get us to the next levels of leveraging our other businesses,” Krikorian said.
Service Equity is also working to create similar models of private equity investment in other markets. Stevens, Pieper and Krikorian are in talks with a group of investors in Kansas City, Mo., who are interested in their investment model.
The model is not to create a franchise of Service Equity, but a strategic partner under the same operational model, Stevens said.
“By digging into other markets, prospecting for gold will turn into other opportunities and partner with some of the accounting and (mergers and acquisitions) firms there,” he said.
Service Equity wants to help the business environment improve in Milwaukee and the Midwest, through its 50-percent ownership of Service Ventures Inc., a San Jose, Calif., based brokerage firm that helps venture capitalists connect with technology companies seeking angel, second- or third-round funding.
Service Ventures was founded late last year. It is in negotiations with three technology start-ups in the Midwest, Pieper said. He declined to give additional information about those three companies.
“Our focus is Midwestern companies that are looking to introduce into the market innovative solutions that are IP (intellectual property) centric,” Pieper said. “We have six different VCs we work closely out there (Silicon Valley).”
Address: Milwaukee County War Memorial, 750 N. Lincoln Memorial Drive
Principals: John Stevens, Chip Pieper and Jean-Marc Krikorian
Types of portfolio companies: Financial services, technology, real estate, green industry or alternative energy
Web site: www.service-equity.com
