HONG KONG Oct 8 Swiss fund-of-hedge-funds manager Gottex is partnering with two former executives of Blackstone Group and Goldman Sachs to back Asian hedge fund managers starved of capital since the global finance crisis.
Gottex, via a partnership with Headland Strategic Ltd founded by Michael Garrow, an ex-Blackstone executive, and Johannes Kaps, who earlier worked at Goldman, will offer hedge fund managers as much as $75 million each from next year. It aims to help them individually build a start-up capital of at least $100 million.
The scale of the initial financial backing is substantial. A typical seed investment in Asia has remained around $25 million in recent years.
Seeders usually pocket 20-30 cents of every dollar earned by a hedge fund in addition to their share of the return generated. Many smaller managers and those looking to start in Asia are willing to share revenues in exchange for long-term capital.
Gottex, via its partnership with Hong Kong-based Headland, plans to start seeding funds by the first quarter of next year and back two to three managers every year.
"The aim is for Headland Strategic to make fairly large day one investments," Gottex co-founder Max Gottschalk told Reuters. "We want to help each fund launch with a minimum of $100 million, a critical amount of capital for hedge funds to survive and grow in Asia."
The partnership has also roped in V-Nee Yeh, co-founder of Hong Kong-based money manager Value Partners, and other investors to commit cornerstone capital to Headland Strategic, Gottex's Gottschalk said.
"Asian dedicated hedge fund assets have seen virtually no growth since the global financial crises, creating an ideal environment for us to negotiate... with top-tier portfolio managers," Kaps said.
Three-quarters of Asia's 1,300 hedge funds manage less than $100 million, according to data from tracker Eurekahedge.
Headland will compete with the likes of Woori Absolute Partners and Ascalon Capital, a unit of Australia's Westpac Banking Corp, in seeding managers in Asia.
Asian hedge funds as measured by Eurekahedge returned an average 9.7 percent through September in 2013, outperforming a 1.4 percent drop in the MSCI's index of Asia-Pacific shares outside Japan during the period.