Fundraising

Tailwind completes spinout, adds to bench

Tailwind Capital has completed its spinout from investment bank Thomas Weisel, and with the split has brought on board Soros veteran Frank Sica.

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As expected, Tailwind Capital has completed its spinout from Thomas Weisel Capital Partners. The New York-based group announced yesterday that it had completed the restructuring of Thomas Weisel’s $1.3 billion fund, thus ending its affiliation with the investment bank. Tailwind had been managing the fund for the past two-plus years.

Douglas Karp, managing partner, Tailwind Capital

Thomas Weisel first launched the private equity fund in 1999 to much fanfare. The vehicle, initially, rarely participated in buyout investments, keeping its focus primarily on later stage VC deals in the telecom and tech space. Because of the earlier focus, the fund has not done particularly well. According to CaLPERS, the vehicle’s net IRR as of June 30, 2005, stood at -16.3 percent.

To help right the ship, the investment bank recruited Lawrence Sorrel at the end of 2002. Sorrel came from Welsh, Carson, Anderson & Stowe. In 2003 Warburg Pincus vet Douglas Karp and Morgan Stanley’s James Hoch were also brought on board, and the new group transitioned the fund into more of a buyout-focused vehicle. Most recently, the group led deals for record label Concord Records, orthopedic device maker Aircast and insurance services outfit Trover Solutions out of the fund.

In a statement, Tailwind cited that the turnaround has been largely successful. Karp, Sorrel and Hoch, in a joint statement, said that the Thomas Weisel fund “is now stable, with a portfolio that is growing in value”. The statement added that the team, through the fund, had invested $213 million in a total of six portfolio companies.

Alongside the news of the split, Tailwind also announced the hiring of Frank Sica, who will join the firm as a managing partner. Sica was formerly the president of Soros Private Funds Management and had previously co-headed the private equity arm of Morgan Stanley, Morgan Stanley Capital Partners. The group is now expected to begin fundraising in the coming months, and could seek as much as $1 billion for its debut vehicle.

For Thomas Weisel, the split comes as the firm is pursuing an initial public offering. The firm registered to go public in October, hiring Goldman Sachs and Keefe, Bruyette & Woods to underwrite the deal.

Tailwind declined comment for this story.