(FORTUNE Magazine) – During the 1960s and 1970s, John Castle built Donaldson Lufkin & Jenrette's venture capital operation, the Sprout Group, into one of the most successful in America, eventually rising to become DLJ's chief executive. He resigned in 1986, after Equitable bought the firm. Now in his second life, Castle has come back to prove that at a time when many deals are sinking, he can still walk on water. Last June Castle, 47, and Leonard Harlan, 51, another DLJ alum, formed Castle Harlan Inc., an LBO-cum-venture-capital firm. By November they had raised $125 million. In December they signed their first deal: Together with William Reagan, president of Reagan Outdoor Advertising, they purchased an $85 million billboard company. While the investment is fairly ordinary, Castle makes its genesis seem like a religious experience. The idea evolved in a Venetian fishing village, where Castle was attending a meeting with Reagan. ''We were sitting in a plaza under a church spire one night,'' recalls Castle. ''As church choirs sang, he persuaded me he was the guy to support to put this deal together.'' Castle committed $11 million. The born-again dealmaker plans to manage Castle Harlan almost exactly as he ran DLJ's Sprout funds, which earned investors an average annual rate of return of over 25%. Castle and Harlan are shooting for closer to 35%. Sounds heavenly.