Lee Equity Nearing Final Close of Debut Fund

Tom Lee made his legacy doing LBOs. Based on today’s news of his massive losses on bad hedge fund plays, he may not want to stray from the buyout world again. Lucky for him, he’s nearing a close on a new pool of capital dedicated to just that.

Lee Equity, the buyout fund Tom Lee launched in 2006, has raised more than $1 billion in commitments, a source familiar with the situation told peHUB. The fund plans to close with at least $1.5 billion in the coming months. According to a regulatory filing, limited partners include Teachers Retirements System of Texas. Bluff View Capital, Credit Suisse Securities, DAV/Weatherly Financial and Cambridge Financial Services provided advisory services.

Beyond its namesake, Lee Equity is entirely separate from Tom Lee’s two ailing hedge fund of funds. This morning’s Wall Street Journal reported that the operation, called Thomas H. Lee Capital Management, and its two funds had lost about 40% this year and Lee is considering shrinking or shuttering them.

Further confusing the situation is the firm Thomas H. Lee Partners, the private equity fund Tom Lee founded in 1974 and made a name for himself with on deals like Snapple. He left to form Lee Equity in 2006, but THL Partners still exists, having no connection to Tom Lee, Lee Equity or Thomas H. Lee Capital Management. Back to Lee Equity. The firm’s strategy is to invest in middle-market media, financial services and retail companies.

Among Lee Equity’s professionals are Bob Wright, former chairman of NBC Universal. Deals the firm has done include the buyout of teen apparel store Debs Shops, and backing health insurer Universal American Financial Corp. The firm also recently joined forces with Genstar Capital to form a health care specialty finance company called MidCap Financial. It seeks to invest in companies valued between $500 million and $3 billion.