Britton Hill: A New Bush Hurdle?

Former Florida Gov. Jeb Bush on Feb. 24, 2014 in Woodbury, New York.

Photograph by Andy Jacobsohn/Getty Images

Former Florida Gov. Jeb Bush on Feb. 24, 2014 in Woodbury, New York.

Britton Hill is the highest hill in Florida.

That’s surely not saying much in a state where the tallest elevation reaches 345 feet above sea level — the lowest high-point of any American state. Even Washington, D.C., has a higher hill. Florida’s own peak in the Panhandle’s Ridge Hills rises gently above farmland just southeast of Florala, Alabama.

Britton Hill Holdings could become a higher hurdle for Jeb Bush, the former Florida governor considering a campaign for the 2016 Republican Party nomination for president.

As we reported today, Bush, who has rebuilt a robust business career since leaving the governor’s office in January 2007 after two terms in Tallahassee, has ventured into the oil and gas business with two private equity firms opened by the Coral Gables-based investment advisory firm that he chairs, Britton Hill Holdings LLC.

For Bush, should he run for president, the mere mention of private equity could offer an opening for critics who pinned Republican Mitt Romney as a “vulture” capitalist for jobs eliminated at companies after the private equity firm he founded, Bain Capital, took over the operations. Romney, a multimillionaire, also benefited from the lower tax rate that comes from taxing private equity income, paying about 14 percent in federal income taxes. Romney, the party’s 2012 presidential nominee, is being encouraged by some to make another run in 2016.

Britton Hill Holdings is no Bain Capital.

Yet at the same time, Bush’s funds are investing in the oil and gas exploration known as fracking and the shipment of gas to Asia at a time when the political debate in Washington, and in the midterm congressional campaigns underway, is turning to the global-warming implications of American energy policy.

Whether these business pursuits become a liability or an asset for someone considering a campaign for president has everything to do with how he might handle them.

“If he gets himself involved in some financial ventures that don’t look good, it could cause him some problems,” says John Geer, a political scientist at Vanderbilt University. “It really depends on how he handles it.”

The funds opened by Britton Hill, based at Bush’s personal consulting office at the Biltmore Conference Center of the Americas adjacent to the historic Biltmore Hotel, are investing in shale-oil and gas exploration and shipping of propane to Asia with a fleet of large gas tankers.

The investment advisory firm includes three other people, a former banker at Lehman Brothers, the New York investment firm that employed Bush when it filed for bankruptcy in 2008, a former natural gas trader for Credit Suisse and a former investment manager who also worked at the Swiss bank.

As we reported, Britton Hill raised more than $40 million for its first fund in 2013, according to a private placement notice filed with the Securities and Exchange Commission at the time. It invested in Inflection Energy LLC, a Denver-based startup that was seeking capital from investors to explore for natural gas in the Marcellus Shale formation in Pennsylvania and New York.

A second Britton Hill fund, BH Logistics LP, raised $26 million from 10 investors in April, including HNA Group of China, according to regulatory filings. The fund used the proceeds to buy 1.4 million shares of Dorian LPG Ltd., according to filings.

“Selling a stake to HNA could help Dorian gain entry to a key market,” our colleague Miles Weiss writes in our story. “The company, formed last July to own and operate a fleet of gas carriers that transport propane overseas, expects demand for the super-sized ships to increase amid rising demand for U.S. shale oil and gas from Asia, documents for its May listing on the New York Stock Exchange show.”

If Britton Hill is no Bain, shale-oil and propane gas also are no coal.

Yet these are the sort of investments that anyone who ultimately makes a decision to run for president will have to talk about in an arena where private equity and fracking already have taken on charged political connotations in a campaign environment short on nuance.

That simply comes with the territory.

“One of the many reasons folks are attracted to Jeb Bush as a candidate is he knows a lot of the challenges that are attached to a national candidacy,” says Kevin Madden, who advised Romney.  “And it wouldn’t come as a surprise to Jeb Bush that everything related to his record as governor and everything related to his resume after governor will be explored by other candidates and the media.”

Bush has said he will decide about running by the end of this year. As anyone with extensive business interests would, he would have to disclose his holdings — potentially divesting those which might conflict with the duties of a president. If elected, he’d be handing his affairs to a blind trustee — as he did with the business career he had built in commercial real estate in South Florida before his first election as governor in 1998.

Still, he has said that, if he runs, he would want it to be a “joyous” campaign.

On the road for the Republican nomination for president in 2016, a path that starts in Iowa and New Hampshire, and in that general election campaign — where private equity became major baggage for Romney in the swing state of Ohio — any debate over how one’s personal wealth is amassed and managed can be fraught with political risk.

“Private equity is hard to explain to the average voter,” says Darrell West, director of governance studies at The Brookings Institution.  “It’s just going to remind people about Mitt Romney, and that’s just not a positive association for any Republican candidate.”

It might not be as joyous as a hike up that remote hill in Florida’s Walton County Panhandle — not that that’s the necessary alternative to running for president. The peaceful place apparently was named for the old postmistress there.

While other Republicans are running around Iowa and other early caucus-primary states this summer, though, Bush has plenty of time to decide about a campaign.

“He does have the ability to start his campaign late, because he’s well-known and likely can tap into a large fundraising network, so he doesn’t necessarily have to be spending a lot of time in Iowa and New  Hampshire right now, ” says West, turning again to that private equity business. “Then again, you don’t want to be doing something this close to an election that is coming back to bite you.”

 

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