Wachovia Capital spins off from Wells Fargo

The 22-year-old firm will be renamed Pamlico Capital and will continue investing WCP's recent Fund II, which has about $600m in dry powder.

Wachovia Capital Partners, the 22-year-old growth capital investment group, has spun off from Wells Fargo into an independent firm called Pamlico Capital.

Wachovia Capital's entire investment team, run by Scott Perper, Frederick Eubank and Watts Hamrick, will stay with the newly independent firm.

“We have been in conversations with Wells since Wells acquired Wachovia. Together we mutually agreed the right long-term strategy for Pamlico was to spin off the Wells platform,” Perper told PEO in an interview.

Wells Fargo, which acquired Wachovia for $12 billion in late 2008, is one of the firm's limited partners, along with AlpInvest, HarbourVest, Lexington Partners and Partners Group, the firm said in a statement. Goldman Sachs and GE are also Pamlico LPs.

The right long-term strategy for Pamlico was to spin off the Wells platform.

Scott Perper

Pamlico did have to get the approval of LPs for the spin-off, Perper said. “All our investors approved the transaction,” he said.

The firm's future has been uncertain since Wells Fargo acquired the Charlotte, North Carolina-based bank. Wells Fargo has a long relationship with mid-market firm Norwest Equity Partners, for which the bank is the sole LP. Wells Fargo has had a continuous relationship with Norwest since 1961.

Wachovia Capital was founded in 1988 and has invested $3.8 billion in growth capital in more than 200 companies. The firm had been investing from its WCP Fund II, which closed in 2007. Fund II was the firm's first raised with external capital. The fund, which totals about $1.1 billion, is about half invested in 14 transactions, Perper said.

Pamlico will look to raise a third fund, but not for some time, he said.

“Right now our focus is to continue our strategy and look for attractive investment opportunities in our industry focused areas – business and technology services, communications and healthcare,” Perper said. “Now would not be the right time to go out on the fundraising road. We still have a lot of capital to deploy.”

Pamlico, like Wachovia Capital, looks to make growth equity and buyout investments of up to $100 million alongside management.