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6 years ago
RPT-Asia hedge funds' star power in focus after Highbridge exec's exit
March 3, 2011 / 2:22 AM / 6 years ago

RPT-Asia hedge funds' star power in focus after Highbridge exec's exit

5 Min Read

(Repeats story issued late on Wednesday)

* Huttenlocher exit shows more parting ways with global firms

* Like ex-Goldman trader Sze, Huttenlocher starting own fund

* New Asia hedge funds raised $3.8 bln assets in 2010,up 50%

* Asia has seen fund closures too

By Nishant Kumar

HONG KONG, March 2 (Reuters) - The $125 billion Asian hedge fund industry's star power just got bigger, with Carl Huttenlocher quitting Highbridge Capital as head of Asia investments to set up his own start-up in the region.

As the fund-raising climate for hedge funds improves and Wall Street banks wind up proprietary trading desks to comply with the 'Volcker rule', star managers and traders are taking matters into their own hands, and setting up brand new investment firms.

Huttenlocher's surprise move adds to the growing trend that marks a shift away from global groups.

It also lifts the prospects of the nascent Asian hedge fund industry as tried and tested fund managers expand options for an increasing number of institutional investors aiming to raise exposure to the region in search of higher yield.

"Asian managers are becoming more autonomous, which reflects their increasing sway in the global markets and their ability to go out and raise capital on their own rather than use the ladder of a global platform," said Frederick Ingham, head of hedge fund investments in Asia-Pacific for money manager Neuberger Berman.

"A trend for spin-outs is positive for the Asian hedge fund industry, because it shows Asian hedge fund managers can stand on their own two feet and run viable, standalone businesses."

The Volcker rule limits the extent to which banks can make bets with their own money.

Huttenlocher has quit JPMorgan's hedge fund firm Highbridge Capital, making the New York-based firm wind down its Asia-focused fund, four sources familiar with the matter told Reuters on Tuesday.

The hedge fund veteran, whose departure from the $26 billion hedge fund surprised many in the Asian hedge fund industry, is set to start his own fund, sources said.

Lengthening List

Huttenlocher joins the likes of former Goldman Sachs trader Morgan Sze, who is at the centre of one of the biggest hedge fund start-ups ever in Asia and expected to launch his $1 billion-plus fund in the second quarter. [ID: nTOE72001Z] [ID: nTOE71N02U]

The growing list also includes Charlie Chan, former Credit Suisse proprietary trader, and Benjamin Fuchs who earlier worked as a proprietary trader for the now bankrupt Lehman Brothers in Tokyo, according to media reports.

New York-based hedge fund Fortress Investment Group , which opened an office in Singapore in October, has moved Adam Levinson, its co-chief investment officer of flagship global macro funds, to the city-state to lead its Asia-specific macro trading activities.

Stardom though is no guarantee of success and the region has seen fund closures, such as Minerva, founded by Stanley Ku, the former head of Fortress's Hong Kong office, and Hong Kong-based Cypress Lane, started by former Goldman Sachs trader Shafiq Karmali. But interest in start-ups remain high.

More Fund Launches

Boosting the confidence is success of new funds in the region with assets raised by them surging nearly 50 percent to $3.84 billion in 2010.

The number of fund launches increased to 95 last year from 78 in 2009 while the average launch size rose to $40 million from $33 million, according to a survey by AsiaHedge, indicating revival of interest in the region after the financial crisis wiped out trillions of dollars in investor wealth.

Some of the success stories include Blackstone Group seeded hedge fund Senrigan Capital, which was launched by former Citadel executive Nick Taylor in 2009 and quadrupled assets to above $800 million last year.

Others such as Turiya Capital, launched by former Goldman Sachs executive Davide Erro and Orchard Capital Partners, which spun-off Stark Investments in 2009, are now exceeding $500 million in assets.

"2011 is already shaping up to be a game-changing year for the Asian hedge fund industry," said Mark Wightman, head of asset management strategy for Asia-Pacific at specialist technology group SunGard.

The region "is firmly on radar and every investor now has a strong reason to add Hong Kong and Singapore to their must visit cities this year," he added. (Editing by Muralikumar Anantharaman) (nishant.kumar@thomsonreuters.com; +852-28474064; Reuters Messaging: nishant.kumar.reuters.com@reuters.net)) (If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com))

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