Zurich On-Line Financing, a subsidiary of Zurich Financial Services Group of Zurich, Switz., plans to form a new investment management company and introduce an interval fund exclusively for wealthy investors, with Thomas Weisel Partners, a merchant bank in San Francisco. Zurich Financial is also the parent of Scudder Kemper Investments of New York.
Some of the details of the new joint venture were disclosed in an Oct. 5 preliminary registration statement filed on behalf of the newly registered fund, the Scudder Weisel Digital Innovators Fund.
The newly-registered investment advisory firm will be called Scudder Weisel Capital Management and will be based in San Francisco, according to the filing. The firm will be jointly owned by Zurich Financial Services and Thomas Weisel Partners. The exact percentages of ownership have not been disclosed.
A Scudder Kemper spokesperson referred Mutual Fund Market News to Zurich Financial for comment. A spokesperson for Zurich Financial declined to discuss the new firm, as did a spokesperson for Thomas Weisel.
The Scudder Weisel Digital Innovators Fund will be one of the first investment products the new firm will offer. It is an interval fund, the shares of which can be purchased throughout the day. However, they can be redeemed only quarterly through tender offers.
The fund will invest in both public and private U.S. and foreign companies, including venture capital companies and pre-IPO firms (those that are expected to have an initial public offering within 24 months from the time of purchase,) according to the fund's registration statement. The companies chosen will be participants in the information, Internet, media, telecommunications and medical technology sectors - what the firm is calling, "Digital Innovators."
The fund will have a sub-adviser handling the day-to-day portfolio management but the preliminary filing does not name that sub-adviser. The fund will pay the adviser an annual management fee as well as an incentive fee if the fund performs well.
The Scudder Weisel Digital Innovators fund will be available in two share classes, both carrying front-end sales charges. Class A shares will carry a 4.75 percent sales charge. Class O shares will carry a 3.00 percent sales charge.
The offering of an investment fund with front-end loads allows Scudder to tap into the broker-sold marketplace - a market that Scudder, whose funds have traditionally been sold directly - does not have a large presence in except through its Kemper Funds unit.
The Scudder Weisel Digital Innovators Fund will only be available to wealthy clients who have a net worth in excess of $1.5 million, the filing said. And only clients with at least $750,000 invested with Scudder Weisel Capital Management will be allowed to invest a minimum of $25,000 in the new fund.
The joint venture gives both Scudder and Zurich Financial a better hold on the high-net-worth marketplace. The affluent investor market has increasingly been the focus of many investment firms in recent years.
The formation of Scudder Weisel Capital Partners and the expected initial offering of the new interval fund allows Zurich and Scudder to take advantage of the expertise of Thomas Weisel Partners, a merchant bank founded in late 1998. Weisel specializes in providing venture capital to small technology companies and underwrites initial public offerings.
The firm was founded by Thomas Weisel, the founder and former chairman and CEO of Montgomery Securities of San Francisco. In the mid-'70s, he became a founding partner in the first technology-focused investment banking boutique, Robertson, Coleman, Siebel & Weisel of San Francisco. Weisel subsequently formed Montgomery Securities while his former investment banking partner Sandy Robertson formed Robertson Stephens investment bank, a rival.
In 1997, Weisel sold Montgomery for $1.3 billion to what is now Bank of America of Charlotte, N.C.
Since then, Thomas Weisel Partners has been an investment banker to many Internet and technology companies. In 1999, the firm completed $15.8 billion of equity offerings, which included 54 IPOs, according to Weisel data.
Weisel has also been building its proprietary investment management unit, specifically created to offer alternative investments to sophisticated investors.