TPG-Axon, Montrica hedge funds to merge

Tue Aug 3, 2010 12:19pm EDT

* TPG-Axon AUM $8 billion

* Montrica AUM $1.1 billion

* Both funds are run by former top Goldman traders

By Emily Chasan

NEW YORK, Aug 3 (Reuters) - Hedge funds TPG-Axon Capital and Montrica Investment Management have agreed to merge in a deal that will bring together assets under management totaling $9.1 billion.

TPG-Axon's founder, Dinakar Singh, said in a letter to investors on Monday that Montrica and its founders, Andrew Metcalfe, Svein Hogset and Fredrik Juntti, would join TPG-Axon as part of the deal.

Montrica, a London-based fund that specializes in event-driven and takeover strategies, has $1.1 billion in assets. It will continue to operate without changes to day-to-day management, the letter said.

No money will change hands in the merger, but the deal will bring several former star traders from Goldman Sachs (GS.N) back together. Singh, who founded TPG-Axon in late 2004, was co-head of the Principal Strategies department at Goldman, while Metcalfe and Hogset were leaders of Goldman's European Principal Strategies group.

Montrica had returns of 1.75 percent for the first half of 2010, while TPG-Axon is up about 2 percent for the year through the end of July.

TPG-Axon and Montrica began discussing a deal in earnest at the end of June, according to a person familiar with the matter. For TPG-Axon, the deal will add additional global perspective to the fund's global long-short equity strategies.

"We've been very selectively playing offense," Singh said in an interview with Reuters last week. [ID:nN27125185] "The hedge fund world has become a place of real differentiation between winners and losers. If you're a large firm and you have resources, this has been a great time to evolve forward."

The deal, reported earlier in The Financial Times, comes a few months after Eric Mandelblatt, an early partner in TPG-Axon, left the firm to start his own fund.

For Montrica, the tie-up will allow the fund to be attached to a larger organization at a time when hedge fund investors are gravitating to larger funds.

The firms expect the combination to be completed over the next month or two, subject to regulatory approval.

Some investors said they plan to monitor developments closely and want more information from Singh about how the future firm will be run.

"I would have to pick this apart a little more," said Jason Goeller, investment officer for hedge funds at New Mexico's state pension fund. (Reporting by Emily Chasan; additional reporting by Karolina Tagaris in London and Svea Herbst in Boston; editing by John Wallace)

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