Flush with cash from their sale of Ultimate Fighting Championship and last year’s Red Rock Resorts IPO, brothers Frank and Lorenzo Fertitta are pumping half a billion dollars in cash into a new fund to seed startups in media, entertainment and technology.
“This is a new platform that has $500 million of capital and that will pursue new opportunities for the family portfolio,’’ said Nakisa Bidarian, who headed UFC’s finances and has been named chief executive of the newly created Fertitta Capital.
The fund will primarily invest between $20 million and $75 million into U.S.-focused growth companies, taking either minority or majority stakes, Bidarian said. The fund will have between 10 and 12 investments in this size range when fully invested. But, Bidarian said, “If we have deep conviction in a company, nothing would stop us from committing $150-$200 million.”
Fertitta Capital would also co-invest with other private equity funds in companies that need larger amounts of capital to grow, he said.
Lorenzo Fertitta and members of Fertitta Capital would be willing to take board seats on the companies they invest in “if it adds value,’’ Bidarian said. “We won’t be dictating how they should be running their business.”
Bidarian said his team has looked at about 80 private companies since launching and has spent “a meaningful amount of time” on three to five of those companies. It has yet to make an investment.
Red Rock, in the meantime, posted its best first quarter EBITDA since its founding by the Fertitta brothers nine years ago.
The Nasdaq-listed company, parent of Station Casinos and owner or operator of 22 gaming resorts nationwide, said adjusted EBITDA grew 2 percent to $136 million from $133 million in the prior year quarter on a 16 percent jump in revenues to $417 million.
It was the company’s 16 consecutive quarter of revenue growth.
“We believe these results are directly correlated to the ongoing expansion of the Las Vegas economy, which continues to see strong population growth, robust employment numbers, increasing wages, an improving housing market, and a large pipeline of planned and under construction development projects, all of which attract new residents and businesses to the Las Vegas market,” said Executive Vice President and CFO Marc J. Falcone.
Las Vegas revenues, including the newly acquired Palms Casino Resort, were up 17 percent year over year to $386 million, and adjusted EBITDA grew by 1 percent to $121 million.
Red Rock’s Native American segment generated adjusted EBITDA of $23 million, up from $20 million for the prior year period, with strong showings at California’s Graton Resort & Casino in and Gun Lake Casino in Michigan.
The company announced a dividend of 10 cents per share payable on May 30 to Class A shareholders.
