HONG KONG (Reuters) - Former FrontPoint portfolio manager John Foo is preparing to launch an Asia-focused hedge fund that will start trading with about $50 million (32 million pounds) on March 1 in Singapore.
The Asia ex-Japan long/short Kingsmead Asian Alpha Opportunities Fund will be value-driven and offer fee discounts to initial investors as it seeks to grow assets in a tough capital-raising environment for hedge funds in the region.
“We will be very competitive on fees because I think investors want value for money,” Foo told Reuters.
“We are giving a founder class discount and are holding advanced discussions with a few parties on that,” said Foo, who once managed more than $200 million for the FrontPoint Asian Event Driven Fund.
Foo and his team left FrontPoint last year after the Greenwich, Connecticut-based hedge fund became embroiled in an insider trading case in the United States, leading to FrontPoint shutting down its Asia fund.
The hedge fund manager, with three of his former FrontPoint colleagues, is reviving Kingsmead which he set up in 2008. The team had moved to FrontPoint in 2009.
Foo said he would continue with the Singapore-based regional back office and trading desk that earlier worked for FrontPoint, hire two more analysts and open a research office in Hong Kong later in 2012 as the fund assets grow.
Kingsmead Asian Alpha Opportunities Fund had the capacity to take in about $500 million, said the fund manager who also worked for Indus Capital’s event driven fund, which had about $1 billion under management when he worked there.
Foo said the world had a raft of macro uncertainties. Fears of a possible hard landing in China, macro-economic problems in India, the European debt crisis and capital outflows from Asia battered stocks in 2011.
“This has resulted in stocks that are undervalued vis-à-vis their growth potential, vis-à-vis relatively strong balance sheets and stable governments in the region,” he said.
The investible universe in Asia has doubled in the last five years, while a flurry of initial public offerings and poor research coverage of companies in the region as investment banks cut analysts has created a fertile hunting ground for tomorrow’s winners.
“If we are able to pick-up 20-25 situations that are under researched, good value, good management ... I think that would be a wonderful opportunity,” the fund manager said.
The launch comes as some high profile hedge funds are expected to compete for attention in 2012 and face cautious investors after an 8.75 percent loss in regional hedge funds, as measured by the Eurekahedge Asian Hedge Fund Index.
Regional industry veterans such as former Asia head of Highbridge Capital Carl Huttenlocher and Seth Fischer, who once managed $3.3 billion for DKR Soundshore Oasis Fund, will be raising capital. Huttenlocher aims to raise $2 billion by mid-2012 in a hedge fund he launched on December 1.
Former Lone Pine and Goldman Sachs Group Inc (GS.N) executives aim to raise $1 billion in an Asia-focused hedge fund, three sources had told Reuters last month.
The list of expected launches includes one from Benjamin Fuchs, who earlier worked as a proprietary trader for the now bankrupt Lehman Brothers in Tokyo, according to media reports.
Alp Ercil, a former partner and the head of New York-based hedge fund Perry Capital’s Asia operations, plans to start his own hedge fund this year with some Perry Capital staff, a source with direct knowledge of the matter told Reuters in October.
Reporting by Nishant Kumar; Editing by Chris Lewis