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Mike Sarafa, until recently the president of the Bank of Michigan, has been recruited to help run a new family investment office in Bloomfield Hills.
The office, Vision Investment Partners LLC, launched in August with a fund of more than $15 million. It is an outgrowth of a deal with a private equity firm in Southlake, Texas, a year ago. And it has its sights set on deals with retail, food and real estate ties, among other segments.
Where did the seed money come from? Two pairs of Chaldean brothers, Mark and Kevin Denha and Omar and Saber Ammori, sold to Gauge Capital a minority but substantial interest in Wireless Vision Holdings LLC, which owns and runs 270 T-Mobile retail stores across the country and is the wireless provider’s largest exclusive retailer.
“That created a windfall, and they needed to create a way to deploy resources,” Sarafa said.
That result is Vision Investment, which is based in Wireless Vision’s headquarters at the northeast corner of Big Beaver Road and Woodward Avenue. A 5,000-square-foot space is being built out on the ground floor.
“Saber and I began talking early this summer,” said Sarafa, who still has several months left on a consulting contract with Farmington Hills-based Level One Bank, which closed in February on its acquisition of the Bank of Michigan. “We’ve known each other our whole lives. We got serious a month ago, and two weeks ago I moved in.”
Prior to co-founding the Bank of Michigan in 2005, Sarafa was president of the Farmington Hills-based Associated Food Dealers of Michigan, an association made up largely of Chaldean and Arab-American retailers.”We were fortunate to get Mike to join us. We wanted a leader to come in and work with Omar and Kevin. Mike was a big free agent. It was Kevin Durant and Mike Sarafa,” said Saber Ammori, making a joking reference to the most prominent recent free agent player in the National Basketball Association.
While all four brothers and Sarafa are managing directors of the family office, Saber Ammori and Mark Denha will concentrate on the T-Mobile business.
Food, real estate focus
Sarafa said the new fund will target investments in food and retail companies and real estate developments, with a focus on companies with sales of between $3 million and $30 million a year and EBIDTA (earnings before interest, depreciation, taxes and amortization) of between $500,000 and $5 million a year.
The brothers have been involved in real estate development and retail food businesses. Kevin Denha was a franchise developer for 7-Eleven, his brother has owned a variety of convenience stores, and Saber Ammori was the lead franchisee for Fuddruckers in the state of Michigan.
“We want to stay in our wheelhouse,” Safara said.
He said the fund will invest in healthy, small companies in need of capital to grow and in turnaround situations where it can provide operational assistance or bring in management help.
“We really like deals where we can add operation expertise,” said Sarafa, who said the fund could grow as needed with additional family money, and that as the office builds a track record, it could raise a second fund that would also include outside limited partners.
The office employs five and plans to be at 15 by year’s end. Sarafa said a human resources manager is joining the office this month and he is looking to hire a financial analyst.
Vision Investment has several portfolio companies already. One is new. The others are companies the brothers owned that have been folded into the Vision umbrella.
Prior to the formal launch of the family office, a deal was struck for it to open and operate 20 Jamba Juice stores in Michigan and 20 in southern Florida in July. Jamba Juice Co. (Nasdaq: JMBA) is based in Emeryville, Calif., and sells healthy food and juice products.
Vision Investment will open its first three Jamba Juice outlets inside Meijer stores in November and two streetside locations, in Ann Arbor and Southfield, in the first quarter.
Moved into the portfolio are about 40 Comcast Xfinity stores the brothers operated inside Wal-Mart and Best Buy stores in Pennsylvania and Indiana, and four new retail strip mall centers, including newly finished centers in Ferndale and Westland and centers being built in Clarkston and Clinton Township.
Sarafa said he has several deals in due diligence, two of them growing out of companies he met in August at the Crain’s Food Summit, an event meant to help jump-start connections in the Michigan food industry. Another Vision Investment initiative is a deal to invest in a household furnishings company. Still another is a 30-store deal with a national retailer.
Infusion of PE funds
“Mike is picking up where Mike George left off, as the titular head of the Chaldean community,” said John Donnelly, managing director of the Grosse Pointe investment banking firm Donnelly Penman & Partners,
Michael George, a co-founder of Melody Farms Dairy Co. and the Chaldean Iraqi American Association of Michigan, died in 2014 at age 81. Donnelly praised Sarafa for skillfully navigating an exit from the Bank of Michigan’s partnership with Lansing-based Capitol Bancorp Ltd.
When the Bank of Michigan was founded, it was part of a national chain of community banks Capitol Bancorp was building. Its model was to own 51 percent of the banks, with local business leaders owning 49 percent.
The Federal Deposit Insurance Corp. later ruled, as the recession hit, that each member bank shared fiscal responsibility for any financial failings of the others.
Sarafa raised $3 million and bought out Capitol Bancorp’s share in July 2012. In August, Capitol Bancorp declared bankruptcy and eventually went out of business. Most of its partner banks were shut down by federal regulators.
The eventual sale to Level One returned a healthy profit to Sarafa’s investors.
“Mike did what many others couldn’t. He got out of the burning building and protected his people,” said Donnelly.
“I’m thrilled to see additional private equity firms in Michigan,” said Michael Beauregard, a senior partner at Detroit-based Huron Capital Partners LLC, annually the state’s most active PE firm.
“What they are doing is consistent with a trend in private equity today, which is to have more of an operational focus,” said Kevin Prokop, a managing partner at Detroit-based Rockbridge Growth Equity LLC. “People who have been operators are marrying their skills to capital.
“And they are smart to focus on the lower middle market. It’s easier there to find companies that need your guidance, and those are small ships that are easier to turn around,” he said.