China private equity firm SAIF Partners foraying into hedge funds

HONG KONG Mon Oct 15, 2012 6:34am EDT

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HONG KONG (Reuters) - SAIF Partners plans to launch a Greater China hedge fund, according to marketing material obtained by Reuters, becoming the first major Chinese private equity firm to branch out into the hedge world.

SAIF, one of China's biggest homegrown private equity firms with about $4 billion under management, is currently speaking to investors about the plan, which is at an early stage.

The SAIF Partners Greater China Fund will employ the long/short equity strategy, the most popular hedge fund strategy in Asia.

Going long refers to buying and holding a security to sell at a higher price. Taking a short position means borrowing a security that one does not own and selling it, in the hope of repurchasing it at a lower price and profiting from the price differential.

The firm, led by former World Bank economist Andrew Yan, did not mention the start-up capital or the launch date in the marketing document.

The marketing document also listed former Credit Suisse executive Brandon Lin who joined SAIF in 2001 and is a partner.

Oliver Liang Zeng, who earlier worked at CICC HK Asset Management and Asia hedge fund Boyer Allan, has joined as an assistant portfolio manager. Boyer Allan shut down in 2011.

SAIF Partners is China's No. 4 private equity firm by funds raised, according to data provider Preqin.

Lin declined to comment when contacted by Reuters.

SAIF, which started investing in Asia in 2001, has invested in more than 100 companies so far in countries such as China, India and South Korea, according to data compiled by Thomson Reuters.

As investors' appetite for hedge funds grows, with money from institutions such as pension funds and endowments pushing the industry assets above $2 trillion, traditional money managers are looking to diversify into the asset class.

Mutual fund giant Franklin Resources bought a majority stake in fund of hedge funds K2 Advisors last month, while Carlyle Group LP said this month it had bought a majority stake in Vermillion Asset Management LLC, a commodities-trading hedge fund manager. (Additional reporting by Stephen Aldred; Editing by Muralikumar Anantharaman)

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