A spinout investment firm from the family office of Blackstone Inc. billionaire Tony James has launched a private equity fund with backing from him and other members of the world’s superrich.
Madison River Capital has collected about $370 million from investors, including wealthy individuals and institutional money managers, for buyout deals targeting small to midsize U.S. companies in the health care, industrials and business services sectors, according to a statement Tuesday.
James, formerly Blackstone’s COO, was an anchor investor providing about $60 million to the buyout vehicle from the New York-based firm, which now seeks to strike a handful of deals this year, said Madison River’s managing partner, David Wittels.
“Now I get to go back to part of the business I like the most, which is putting money to work,” Wittels, 60, said in a Zoom interview about ending Madison River’s fundraising. “As the calendar flipped into 2025, we’ve seen a large pickup in volume in terms of potential investment opportunities.”
The fund’s launch advances a major change in the financial affairs for one of Wall Street’s biggest fortunes. James, 74, previously oversaw his private equity investments through his New York-based family office, Jefferson River Capital, where Wittels served as president before he led efforts to launch the spinoff firm in early 2022. The same year, James stepped back from Blackstone after spending almost two decades at the Wall Street giant and recruited a former money manager for Laurene Powell Jobs to become chief investment officer for his family office.
Madison River made its first public announcement in early 2024 on a strategic investment into the health care services firm Senior Care Therapy for an undisclosed sum. In July it disclosed a $70 million equity investment for JDC Power Systems, a provider of technical services and equipment to data centers, and it still oversees private equity assets on behalf of James. As a result, the firm has overall assets under management of more than $1 billion, according to regulatory filings.
“David and his team are excellent investors, collaborative partners and careful stewards of capital,” James — who has a net worth of about $8.1 billion, according to the Bloomberg Billionaires Index – said in the news release from Madison River Capital. “They have achieved strong results.”
Madison River is preparing to ramp up its investment activity as money managers for the world’s superrich are increasingly stepping in to take risks when other investors shy away. Wealthy families helped fuel a rebound in buyout deals for listed companies last year, while they’re also replacing private equity money in oil markets and have pushed for changes at public businesses.
A recent Citigroup Inc. survey of 338 family offices — firms that discreetly manage the financial affairs of the world’s rich — cited private equity as their most bullish asset class for the next 12 months.
“Our fund is specifically targeted to the lower middle market,” Wittels said. “There’s a relatively large disconnect in supply and demand, and that just yields for us attractive entry multiples.”
James and Wittels first worked together almost four decades ago at Donaldson, Lufkin & Jenrette, where the billionaire built up its investment banking businesses before its 2000 sale to Credit Suisse.
Wittels then helped James establish Jefferson River — named after a waterway that runs through a Montana ranch acquired by the U.S. billionaire — in 2016 after working at the hedge fund Scopia Capital Management. Other staff at Wittels’ spinout firm who came from Jefferson River’s private equity team are former Clayton Dubilier & Rice executive Richard Dresdale, onetime Goldman Sachs Group Inc. banker Matthew Clancy and Michael Somma, who also previously worked for Scopia Capital.
Madison River now seeks to add junior staff to its overall team of about a dozen employees, said Wittels, who readily acknowledges James’ influence on his firm.
“This fund is really the byproduct of Tony,” Wittels said. “[His] mentorship has been incredible to us.”