|"Mack the Knife" joins the barbarians as Wall Street retreats from risk|
NEW YORK ( TheStreet) -- KKR ( KKR), the private equity giant chronicled in the 1980s buyout epic Barbarians at the Gate has brought on former Morgan Morgan Stanley ( MS) and Credit Suisse ( CS) Chief Executive John Mack, who was known as "Mack the Knife" for his cost-cutting penchant at both firms. Mack will join KKR as a "Senior Adviser" where he will help drive new investing activities and provide advisory work to companies within the firm's portfolio. Other advisers include former Caterpillar ( CAT) CEO James Owens and Bertelsmann co-chair Richard Sarnoff.
"John Mack is a great leader... He will help make us smarter investors and strengthen our firm," said KKR co-founder Henry R. Kravis in a statement. In the statement, KKR noted that "Senior Advisers" work directly with the firm's investment specialists on investments. "The volatile economic environment has created a demand for both capital and operational expertise," Mack added in a statement. Bloomberg reports that the firm is currently raising a $10 billion North American fund. After starting his career at Morgan Stanley as a bond salesman in the early 1970s, Mack left the firm in 2001, after losing out to Phil Purcell in a public CEO battle as Morgan Stanley tried to complete a merger with Dean Witter. Mack returned to Morgan Stanley as chief executive in 2005 and used his fixed income acumen to drive record profits at the bank on bolstered trading of mortgages and high yielding debt. However, as the financial crisis hit, Morgan Stanley narrowly avoided a collapse only after tapping emergency bailout funds and selling a near 20% stake in the bank for $9 billion to Mitsubishi UFJ of Japan. At the helm of Morgan Stanley, Mack completed a spinoff of the banks Discover Financial banking and credit cards unit in 2007, but then was forced to convert the investment bank to a bank holding company to access emergency Federal Reserve funds a year later. Morgan Stanley took $107 billion in emergency loans from the Federal Reserve, more than any other bank during the crisis, according to Bloomberg. In 2010, Mack stepped down as Chief Executive and was replaced by James Gorman, who replaced Mack's trading experience with a wealth management expertise at the top ranks of Morgan Stanley. In 2011, Mack retired as Chairman, ending his long career at the firm.
Currently, Wall Street investment banks are facing an exodus of traders and financiers to f private equity firms and hedge funds as new regulations like the Volcker Rule restrict once lucrative trading businesses. In recent years, KKR, The Blackstone Group ( BX) and The Carlye Group have set up credit trading and leveraged loan businesses that mirror investment banking operations prior to the crisis. For more on John Mack, see TheStreet's question and answer with the Wall Street head in 2011. For more on Morgan Stanley shares, see who will benefit from a Wall Street performance gap. To learn more about private equity buyouts and possible investments, see 5 stocks that could be trampled by private equity sellers. -- Written by Antoine Gara in New York.