CalPERS Forms Long-Term Strategic Partnership With San Francisco-Based Thomas Weisel Partners; Investment Includes $100 Million Stake in Merchant Bank.

Business Editors

SACRAMENTO, Calif.--(BUSINESS WIRE)--Jan. 20, 2000

The California Public Employees' Retirement System (CalPERS) announced today that it is forming a long-term strategic partnership with the San Francisco-based Thomas Weisel Partners (TWP) to make investments in the growing internet, technology and communication industries of the U.S. economy.

The partnership includes three components:

- CalPERS will purchase a 10 percent stake in Thomas Weisel

Partners for $100 million;

- CalPERS will commit $500 million to act as lead investor in new

alternative investment funds established by the California

investment bank; and

- Subject to approval by the pension fund's Investment Committee,

CalPERS will make available up to $500 million to support new

business activity by the firm.

&uot;This is a unique opportunity for CalPERS and Thomas Weisel Partners,&uot; said William D. Crist, President of CalPERS Board of Administration. &uot;TWP is one of the last major independent investment banks focused on some of the fast growing internet, technology and communication sectors of the economy, giving the firm a competitive advantage in the marketplace. The firm's experience and position in the marketplace and CalPERS backing will help to break new ground in the growth sector capturing value for both partners.&uot;

At the end of the year, TWP completed over 100 transactions, valued at $23 billion, with revenues of approximately $186 million. The California investment bank, formed in January 1999, has been profitable since its second month of operation and exited the year with approximately $100 million in revenues for the 4th quarter. In addition, the firm has raised a $1.25 billion private equity fund.

&uot;This investment will tap the strength and innovation of the technology and communication companies that have made California their home while benefiting our economy,&uot; said Charles P. Valdes, Chair of CalPERS Investment Committee.

&uot;The investment from CalPERS enables us to strengthen the capitalization of Thomas Weisel Partners and will empower the firm to seize significant market opportunities, and increase revenues and earnings,&uot; said Thomas W. Weisel, Chairman and CEO of Thomas Weisel Partners. &uot;Any dilutive effect from the potential conversion of the convertible shares to a 10 percent share in operating profits of the firm is more than offset by increased earnings opportunities.&uot;

TWP intends to use the $100 million investment to increase the firm's capital to $165 million and to provide investment and working capital for new business initiatives across all areas of the firm -- brokerage, investment banking and asset management. The initial $500 million could be used to create a series of new investment funds including a mezzanine fund, an earlier stage private equity fund, a fund of funds, and an international private equity fund.

CalPERS investment in TWP is the most recent investment in the System's Alternative Investment Management (AIM) Program.

Thomas Weisel Partners, L.L.C. is a research-driven merchant bank providing investment banking, institutional brokerage, private client services and private and public equity investing focused on next generation internet and internet infrastructure companies. The team at Thomas Weisel Partners has over 450 employees, including 65 partners, and is headquartered in San Francisco with additional offices in New York, Boston and London. For more information about the firm, please visit its Web site at www.tweisel.com.

CalPERS is the nation's largest public pension fund with assets totaling more than $165 billion. The System provides retirement and health benefits to more than 1 million state and local public employee and their families. For further information on CalPERS, please visit the System's Web site at www.calpers.ca.gov.