TH Lee Putnam Lures GE Equity’s Jeff Coates –

STAMFORD, Conn. – Thomas H. Lee Co. and Putnam Investments have hired Jeffrey Coates, a managing director at GE Equity, and are courting several other GE Equity executives to head an Internet investment fund.

The vehicle will be the first of many proposed funds to be managed by TH Lee, Putnam Capital, a joint venture between the two firms to build a family of alternative investment products (VCJ, August, page 8).

At GE Equity, formerly GE Capital Equity Capital Group, Coates was the second-in-command, according to a source familiar with the situation, and he led the division’s Internet-related deals, including investments in ValueVision Inc., Star Media Network Inc., Wink Communications, Launch Media and iXL Enterprises Inc.

Executives from Putnam said the Internet fund will have a target of between $500 million and $1 billion. Coates will use the same investment strategy at TH Lee Putnam as he did at GE Equity, the source said – namely, making minority investments in later-stage electronic commerce and related Internet companies.

The source declined to say what other GE Equity executives were being recruited but added that managers might also be hired from other firms. The source also said Coates and his team could head additional funds for TH Lee Putnam in the future.

When the venture was announced, Scott Sperling, the president of TH Lee Putnam and a managing director, said Thomas H. Lee Co.’s primary role would be to select management for the funds.

Executives at GE Equity declined comment for this article.