Gores Plans Offering of a Closed-End Debt Fund

A Los Angeles buyout firm run by billionaire Alec E. Gores plans to raise as much as $250 million in an initial public offering of an investment fund.

The new closed-end fund, to be called Gores Investment Corp., would use the proceeds from the share sale to invest in the debt of medium-sized technology and telecom companies, the company said in a Securities and Exchange Commission filing Thursday. Some of the debt may be convertible to equity.

Bear Stearns Cos. and Deutsche Bank Securities Inc. are set to underwrite the IPO.

The fund would be managed by Gores Investment Management, a new advisory firm that is the 11th company since April 12 to unveil plans to use an IPO to raise money for an investment fund. Thomas H. Lee Partners said this week it planned to raise as much as $500 million from the public. Kohlberg Kravis Roberts & Co. and Blackstone Group are among those that filed for IPOs last month.

The offerings recently announced could raise as much as $5.75 billion. Such investment companies distribute at least 90% of their profit in dividends in order to be exempt from federal income tax.

Alec Gores, who founded Gores Technology Group in 1987, has acquired all or part of 35 companies, the SEC filing said.

He made his first fortune by selling a computer distributor he started in his parents’ basement. Last year, Gores raised $400 million from large investors for a global private equity fund.