SAN FRANCISCO – Thomas Weisel Partners has lured Ashu Rajbhandari away from the Washington State Investment Board to head up a new private equity fund-of-funds.
Alan Menkes, a managing partner at Thomas Weisel, said a target amount had not yet been chosen for the fund-of-fund’s size. But a source familiar with the situation said the firm may seek as much as $1 billion.
“I’d like the fund to be as large as I can get it, but I’ll be happy with anything,” Rajbhandari said.
The fund-of-funds will commit to 40 venture capital and buyout funds that target growth investing. Rajbhandari said he expects most of the opportunities on the buyout side to come from middle-market firms. The fund will also look for international investment opportunities.
A significant portion of the capital raised for the fund-of-funds may come from the California Public Employees’ Retirement System, which purchased a 10% stake in Thomas Weisel Partners in February and agreed to commit $500 million in new funds launched by the firm (VCJ, March, page 22)
The new fund is further proof that Thomas Weisel is serious about building a family of private equity funds that will eventually put the firm in the same league as multi-fund managers like The Blackstone Group, Thomas H. Lee Co. and The Carlyle Group. In January, Thomas Weisel held a final close on a $1.25 billion buyout fund that will focus on the technology sector.
Menkes has said his firm is also thinking about creating funds that will focus on Europe and early stage investments.
Rajbhandari joined Washington State in November, 1998, after working at a family-affiliated buy-and-build firm in Malaysia for nearly five years. At Washington State, he headed up private equity investing. The private sector has proved seductive to previous pension managers – Rajbhandari replaced Terry Blaney, who left to head up the Delta Air Line pension’s private equity investing.
Private sector jobs can offer investment professionals far greater compensation packages and incentives than most public sector jobs.
Washington State is replacing Rajbhandari with Tom Ruggles, who has been an investment officer at the pension for more than eight years.
Washington State allocates roughly 15% of its portfolio, or $6.5 billion, to private equity, and the pension will likely commit over $1 billion to such funds this year.