Two Sigma to turn to outside fundraising for PE fund
After previously only investing partners' money, Two Sigma is turning to external clients to raise investment for its private equity offering. The move is part of the firm's spinning out of its private equity business, which will go by the name Sightway Capital. The firm's quantitative focus within its hedge fund strategies has seen it grow its assets significantly, now ranking among the largest quant hedge funds globally. The firm has also been expanding into the insurance space, providing coverage for small and medium-sized businesses through a partnership with AIG. 

Two Sigma Planning to Raise Outside Money for Private-Equity Investments

By Juliet Chung

Two Sigma Investments LP is preparing to raise outside money for its private-equity strategy, which has for years invested only partners’ money, according to people familiar with the matter.

The New York quantitative hedge-fund firm is spinning off its Two Sigma Private Investments into a business called Sightway Capital and hopes to register it with the Securities and Exchange Commission in January, according to people familiar with the matter. It is unclear how much money the unit currently manages and how much outside money it plans to raise.

Sightway will continue to focus on illiquid investments, said a person familiar with the venture, including in credit, special situations, real estate and natural resources. A website for Sightway showcases video of an oil rig, farming equipment, a train, a plane and medical equipment. Wray Thorn will continue to lead the business.

“While a wide and growing number of markets and asset classes globally lend themselves to algorithmic and systematic approaches, a number of primarily illiquid investment in private assets still require a different approach,” wrote Sightway’s new chief of strategy and capital development, Susan Soh, in an email viewed by The Wall Street Journal.

Sightway’s approach, she wrote, “focuses on partnering with experienced industry operators and strategic partners to build business platforms in targeted industries, helping these businesses as they seek to grow over time.”

Two Sigma was founded in 2001 by a computer scientist, David Siegel, and a mathematician, John Overdeck, who had both worked at hedge funds including the D.E. Shaw Group. The firm reached $50 billion in assets under management in October.

The Sightway effort marks a continued expansion of its business from quantitative investing. Last year Two Sigma joined with American International Group Inc. and Hamilton Insurance Group Ltd. to provide an automated, online analytical system to issue policies in minutes to smaller businesses like beauty parlors and medical offices. Early this year, a Two Sigma affiliate agreed to work with AIG on an insurance platform. The firm also has a venture arm that invests internal money.

A person familiar with Two Sigma said the firm continues to be focused on its hedge funds.

Leslie Scism contributed to this article.

Write to Juliet Chung at juliet.chung@wsj.com