The $30 Billion Kitty

The standard playbook in private equity is to borrow, buy and cut costs ruthlessly. But a massive windfall from investments in PetSmart and Chewy has taught BC Partners’ Raymond Svider that sometimes, doubling down on risks is a better option.

- ANTOINE GARA

RAYMOND SVIDER, chairman of private equity firm BC Partners, remembers the intense pressure he felt in the days leading up to Christmas in 2017. His firm’s biggest investment, the brick-and-mortar pet food retailer PetSmart, was flailing. Its antiquated technology needed an overhaul; costs were ballooning. Svider was splitting time between BC’s office on Madison Avenue in Manhattan and PetSmart’s Phoenix headquarters, where he was acting CEO. PetSmart’s bonds were trading just above 60 cents on the dollar.

He arrived in Phoenix to learn from PetSmart’s CIO that the highly leveraged retailer had put in place a companywide hiring freeze to conserve cash, forcing it to rely on pricey contractors.

“I didn’t know there was a hiring freeze,” recalls Svider, who canceled it on the spot, freeing his CIO to make 35 hires. “You need to be nimble and flexible. Sometimes strict rules force people to do the wrong thing because they’re just applying rules.”

At the time, Svider was bucking almost every business and investing convention. A leveraged buyout artist raised in Paris, with a master’s degree in electrical engineering from one of France’s “grandes écoles” and an MBA from the University of Chicago, Svider, now 59, was working double duty — two days a week stewarding the $40 billion (assets) PE firm, three days at 1,650-store PetSmart, for which BC paid $8.7 billion in 2014.