Fund Closes: Tom Weisel Closes $1.25B Tech Fund –

Thomas Weisel Partners this month will hold a final close on its debut technology-focused buyout fund, rounding up a total of $1.25 billion.

In addition to garnering commitments from traditional institutional investors, including corporate and state pensions, Thomas Weisel Capital Partners LP has commitments from 175 active and retired chief executive officers, who contributed a total of $115 million to be part of the fund’s “CEO founder’s circle,” said Alan Menkes, a managing partner and co-director of private equity at the firm.

The fund also has a number of investors from Canada, Europe and the Middle East, Menkes said.

The vehicle was launched last February shortly after Thomas Weisel left NationsBanc Montgomery Securities (now Bank of America) to start his own investment bank. The fund will tap professionals at the investment bank, as well as its network of CEOs, for deal flow.

Menkes left his post as Managing Director at Hicks, Muse, Tate & Furst more than a year ago (BUYOUTS Oct. 12, 1998, p. 3). Joining Menkes in managing the fund are Derek Lemke and Bill Bunting.

Menkes said the fund’s private placement memorandum was circulated with no target on the cover. However, Menkes added, “We always wanted to raise $1 billion.”

Thomas Weisel Capital is one of a number of new buyout efforts to focus on technology. Earlier this year, Silver Lake Partners LLC saw investors stampede to get into the firm’s debut fund, which held a final close on $2.2 billion. Last month, Silver Lake inked an agreement to make its first acquisition (see story p. 22).

In addition, traditional buyout firms, including Hicks Muse and Texas Pacific Group, will raise separate portions of capital from their next buyout funds to devote to the tech sector.

“I think that institutional investors are looking for more exposure to technology and growth,” Menkes said.

Although the fund will focus on both control and growth investments, Thomas Weisel Capital’s first two deals saw the firm take minority positions in young tech companies. The firm invested $15 million in Alliance Consulting, an information technology consulting company with approximately $100 million in annual revenue. The firm also invested $25 million in optical switch maker Tellium, Menkes said.