UPDATE 1-Morgan Stanley buys into Asian hedge fund startup
(Adds further detail)
HONG KONG, March 12 (Reuters) - Morgan Stanley (MS.N) has agreed to buy a minority stake in Abax Global Capital Ltd., a hedge fund startup that is being formed to invest in special situations in Asia, the U.S. investment bank said on Monday.
The size of the stake and value of the deal, which is being done by Morgan's fund management arm, were not disclosed.
The founders of Abax include former employees of Chicago-based hedge fund giant Citadel Investment Group LLC, which manages more than $13.4 billion.
They include Chris Hsu, a former Citadel managing director with responsibility for its multi-billion-dollar Asian special situations group, and Frank Qian, formerly Citadel trader and risk manager.
The third founder is Donald Yang, the former head of Hong Kong and Greater China debt capital markets at Merrill Lynch.
Abax will be based in Hong Kong and invest in private and public-sector issuers in Asia, with a primary focus on Greater China, including mainland China, Taiwan and Hong Kong, Morgan said.
The Financial Times, citing sources familiar with the matter, has reported Abax is expected to be the first independent Asian hedge fund start up to begin with more than $1 billion in assets.
Asia makes up just a small part of the estimated $1.43 trillion hedge fund market. Hedge funds focused on Asia had about $140 billion in assets under management at the end of 2006, according to industry research group Eurekahedge.
ACCESS FOR CLIENTS
Morgan said the deal adds Abax to the stable of independent investment managers with whom its fund arm collaborates, which includes Avenue Capital, Lansdowne Partners and Traxis Partners.
The U.S. firm, which is also one of the world's largest prime brokerages serving hedge fund managers, said the deal was part of its broader strategy to grow its asset management business in Asia.
"We are expanding the range of investment strategies we offer to both our institutional and our high net worth individual clients," Morgan Stanley Asia Chief Executive Hans Schuettler said in a statement.
"This new alliance with Abax will provide our clients access to investment expertise in a distinctive, highly attractive asset category."
