Two Sigma to Spin Out Impact Arm as Internal Frustrations Simmer

Two Sigma Investments, the $60 billion quant giant, plans to spin out its private equity impact-investing unit amid internal discontent.

Two Sigma Impact’s inaugural fund raised$677 million, short of its $750 million target, according to people familiar with the matter. That occurred during a challenging environment as investors who allocate to funds struggled with liquidity. Still, some employees were disappointed about the extent of external fundraising support they received from the parent company, a person familiar with the thinking within the unit said.

The spinout is the latest in a series of recent disruptions for the firm’s ...