We reported in October on the rumor that Xe Services, the mercenary outfit formerly known as Blackwater, had been purchased by agribusiness giant Monsanto. While those rumors turned out to be false, the bad news is: Xe has, indeed, been purchased, and as of now there’s no way of knowing who the new owners really are.

The company was bought out by private investors via private equity companies that don’t have to divulge any of their dealings, with Bank of America providing much of the $200 million in financing for the deal.

New York-based USTC Holdings said it will acquire Xe and its core operating subsidiaries, but did not disclose the price or terms of the agreement in a statement. USTC Holdings is an investor consortium led by private equity firms Forte Capital Advisors and Manhattan Partners.

Various researchers have been trying to follow the trail, but so far without much luck.

Keeping it private

One thing that is known: Forte Capital Advisors is the baby of long-time Blackwater ally Jason De Yonker:

DeYonker has unique experience with the Company that dates back to its founding in the late 1990s. He advised the Company through development of its early business plan and expansion of the Moyock training facility as well as supporting negotiations of its first training contracts with U.S. government agencies. Between 1998 and 2002, Mr. DeYonker co-managed Xe founder, Erik Prince’s family office which included management of Mr. Prince’s portfolio companies.

What does that mean? The dude is a glorified accountant.

Prior to joining Forté, Jason co-managed a +$100 million family office. In addition to actively managing various platform companies, Jason was a part of the executive team responsible for family wealth management. Jason has spent the last 18 years advising on various mergers, acquistions and divestitures with an aggregate transaction value greater than $1 billion. Jason’s experience include: transaction advisory, portfolio management, real estate development, venture capital and cross border dealings. Jason began his career with Arthur Andersen Corporate Finance Group, and was a Director in Deloitte & Touche’s Corporate Finance Group. He also was the Finance Director for the West Family Trust, a venture capital group focused on cross-border transactons. Jason recieved a Bachelor of Business Administration, with a concentration in finance and accounting, from the Univeristy of Michigan.

The other investor? It looks like the very junior partner will be Manhattan Partners, a private equity company – a shop that gathers money from anonymous rich investors and uses the pool of cash to leverage buyouts of big companies they wouldn’t have been able to take over on their own.

Manhattan Partners invests in “compelling growth and special situation transactions,” but this will be their first known foray into defense industries – WarIsBusiness.com reports (via Spencer Ackerman):

Manhattan Growth Partners is led by Dean Bosacki and Patrick McBride. Bosacki serves on the board of “the world’s largest commencement photography business,” among other companies. Manhattan Growth Partners, which describes itself as “a progressive thinking private equity firm,” also holds a majority interest in Hugo Naturals, a line of organic, vegan-friendly soaps, lotions, scents and soy candles sold at Whole Foods and other greenwashed retailers.

Or as Spencer Ackerman put it at Wired,

The next time you sink into the tub after a stressful day, your relaxation illuminated by the plume of the soy candle you bought at Whole Foods, know this: you are funding the world’s most infamous private security company.

You’ll note that there are actually two separate companies involved: Manhattan Partners and Manhattan Growth Partners. But that’s the way private equity works: Set up different shells for different transactions to limit the ability to figure out who owns what.

Prince goes bye-bye

It appears that company founder Erik Prince, a former Navy Seal, is cashing out and will no longer be involved in operations (but will continue to receive payments from the company over the next few years). Prince had been taking a lot of heat for his company’s involvement in civilian massacres in Iraq, and questions had been raised about cost and performance on Blacwater/Xe’s multi-million dollar government contracts. Prince moved to Dubai in August.

It has been trying to rehabilitate its image since a 2007 shooting in Baghdad that killed 17 people, outraged the Iraqi government and led to federal charges against several Blackwater guards… In March, Senate Armed Services Committee Chairman Carl Levin suggested the Pentagon should consider banning Xe from a $1 billion deal to train Afghan police. The Michigan Democrat said he thought the company’s involvement was hindering the U.S. mission in Afghanistan.

The firm had recently agreed to pay $42 million in fines. And according to the New York Times DealBook blog, the State Department had also threatened to “stop awarding contracts to the company as long as Mr. Prince owned the firm”.

So, who actually owns Xe now? Who knows….

Some more fun connections:

Erik Prince’s sister Betsy is married to Dick De Vos, the son of the co-founder of the Amway Corporation. He lost a race for Governor of Michigan in 2006; she’s the former chair of the Michigan Republican Party.

Dad Edgar Prince was a industrialist who made the $100 million fortune mentioned in De Jonker’s biography (above). He was also instrumental in funding the religious right, and funded and served on the board of the Family Research Council.

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(Image via RawStory)