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Thomas Lee Plans to Sell Shares in Hedge Fund Early Next Year
By Elisa Martinuzzi
Nov. 17 (Bloomberg) -- Thomas Lee, the billionaire buyout executive, pushed back plans to raise $400 million in an initial public offering for a fund to invest in hedge funds until early next year.
``We plan to begin marketing the fund in the new year and we are quite optimistic about the prospects,'' Lee said in an interview. His firm had intended to sell shares by the end of 2006. ``The entire process has taken somewhat longer than originally foreseen,'' he said.
The delay comes as London-based Marshall Wace LLP attempts to raise 1.5 billion euros ($1.9 billion) in the largest initial public offering of a hedge fund. Goldman Sachs Dynamic Opportunities Ltd. raised $507 million in an IPO in July. Its London-listed shares are unchanged at 100 pence since the share sale.
Lee, known for making more than 10 times his money from the takeover of Snapple Beverage Corp., will sell shares in London for the Lee Diversified Opportunities Ltd. fund. Lee, 62, stepped down in March from Thomas H. Lee Partners LP, the Boston-based takeover firm he founded 32 years ago, to expand his hedge-fund business.
Thomas H. Lee Capital Management's Blue Star I hedge fund ranks third by returns among funds that invest in hedge funds in the five years ended Aug. 31, the company said last month, citing MARhedge, a hedge-fund research company. The fund has returned 22.1 percent annually, net of fees, over the past four years, the company said.
Marshall Wace
Thomas H. Lee Capital Management oversees $1.9 billion. Lee had committed to contribute as much as 5 percent of the $400 million sought by the fund.
Hedge funds are largely unregistered pools of capital that are typically limited to wealthy investors. They allow the managers to participate in the gains they generate. By selling shares of closed-end investment companies and listing them on an exchange, asset managers are granting access to individual investors.
To lure buyers to its MW Tops Ltd., Marshall Wace is capping the listing fees at 1 percent of the proceeds, with the remainder covered by Marshall Wace itself.
Lee's most profitable investments include the $135 million purchase of Snapple in 1992, which he sold two years later for $1.7 billion