TH Lee tech team to spin out

Harvey Golub, Ramana Raghavendran and Renny Smith, partners at TH Lee Putnam Ventures, will spin out to raise a $500 million fund, while the Thomas H. Lee Partners-affiliated tech group winds down.

Three top partners of TH Lee Putnam Ventures, the technology-focused venture between Boston buyout firm Thomas H. Lee Partners and Putnam Investments, are leaving to start their own firm.

Harvey Golub, Ramana Raghavendran and Renny Smith will leave TH Lee Putnam Ventures to form GRS Partners, to be based in New York, according to Smith.

According to a report in the Wall Street Journal, the new firm will seek to raise a $500 million fund.

TH Lee Putnam was formed in 1999, originally as TH Lee Putnam Internet Partners. The firm eventually raised a $1.1 billion fund. As the Internet investment bubble popped, the firm refocused on later-stage companies in need of technological assistance and offshore labour relocation.

The firm was renamed TH Lee Putnam Ventures and, in 2002, it added Golub as chairman. Golub is the former chief executive of American Express.

GRS Partners will pursue a space similar to that currently targeted by a refocused TH Lee Putnam Ventures – business processing, financial services and marketing services businesses in the US. Among TH Lee Putnam Ventures winning investments have been NEW, an administrator of extended warranties for consumer products, and Submarino.com, a Brazilian online retailer.
 
Largely under Raghavendran’s watch, TH Lee Putnam Ventures has been very active overseas, particularly in India and the Philippines, where the firm has established offshore service centers to support the business of mostly US-based companies like NEW. GRS Partners will maintain offices in Boston, where Smith will be based, and in New York, but will not have overseas offices.

TH Lee Putnam Ventures will not raise another fund, said Smith. “It’s come to a natural end,” he said.

Despite “plenty of tough times” following the Internet market implosion of 2001, Smith says the $1.1 billion fund is on track to return a “respectable” amount of capital, which should place it among the top quartile of funds raised in the 1999 to 2000 time period. “Getting here from there has been hard,” added Smith.

The departing partners of TH Lee Putnam Ventures will continue to oversee the management and exit of the remaining portfolio companies.

Thomas H. Lee Partners has been a launching pad for several successful splinter groups, including Boston’s Berkshire Partners, New York-based Arsenal Capital and Boston-based JW Childs Associates.