US firm Greenberg Traurig has asked partners for additional capital in a bid to create what it terms a “further equity cushion” during economic uncertainty.
The capital call, which it is understood is expected to raise $24m, requires equity partners to contribute 1 to 5 per cent of one year’s total profit share, according to the firm’s chief executive officer Richard Rosenbaum. A spokesperson for the firm confirmed that the contributions, which will be payable over two years, will be based on ‘salary’ levels, but declined to provide a further comment.
When asked how much of an impact the capital call will have on equity partners at the firm’s UK office, Greenberg Traurig Maher (GTM), Rosenbaum said that it applies to “all” shareholders, of which the firm is thought to have around 300. He added that the decision is not based on any current need for cash but a desire to pad out its “equity cushion” given an unpredictable market.
“We have very low to no debt most of each year though we have significant credit availability, require modest capital compared to our peers and have not raised any capital from our shareholders in over 10 years,” he said.
“So while there was no current cash need, bank or other requirement giving rise to this decision, it was a prudent move to create a further equity cushion which is fully consistent with our conservative financial management approach and with what other well-managed businesses are doing given the uncertainties in today’s global economic climate.”
The firm’s UK arm, which launched in 2009 with the hire of former Mayer Brown co-vice chairman Paul Maher, made a loss of £714,000 in its first full year in the City, after incurring £9.4m in expenses. In 2009-10, the firm lost £3.3m following set up costs of £7.1m (2 May 2011).