| HONG KONG
HONG KONG Former Goldman Sachs trader Morgan Sze is set to launch his highly anticipated $1 billion-plus hedge fund in Hong Kong on Friday, three sources familiar with the plan told Reuters.
Sze's Azentus Capital has received commitments of more than $1 billion for his multi-strategy fund, said the sources, who declined to be identified because the plan has not been made public.
The launch comes as a growing number of high-profile traders plan hedge funds as Goldman and other Wall Street banks shut proprietary trading desks in response to the "Volcker rule."
That rule limits the risks banks can take with their own capital in the wake of the global financial crisis.
"It's a long time since Asia has seen a launch of that size," said Andrew Gordon, head of alternative investment services at BNY Mellon in Asia Pacific.
"I think it's the sign of the ongoing progress of the industry which is good news. Maybe the less good news is that it's making it more difficult for some to launch small and grow big," he added.
Hong Kong-based Sze, former head of Goldman's Principal Strategies group, received an asset management license for Azentus Capital in February from the Securities and Futures Commission.
The firm, one of the biggest hedge funds to launch since the onset of the credit crisis, is one of the most high-profile in Asia, home to only 18 hedge funds managing more than $1 billion.
By comparison, London has 63 managers with assets of more than $1 billion, while New York has 128, data compiled by industry tracker Hedge Fund Intelligence shows.
The fund, which plans to adopt a number of investment strategies including equity long-short, risk arbitrage and special situation investing, has hired Roger Denby-Jones, former chief executive of Asia-focused hedge fund Boyer Allan Investment Management.
Other team members include former Goldman Sachs (Asia) executives Bruce Kirk, Mohan Rajasooria, Jenny Sun Kin-nam and Jeffrey Zielinski.
The launch is a significant milestone and lifts the prospects of the $152 billion Asian hedge funds 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.
It also strengthens the revival of flows into the industry that saw 95 new launches attract $3.84 billion in 2010, an increase of 50 percent from a year earlier, data from industry tracker AsiaHedge showed.
Last year, hedge funds in the region added $20 billion to their assets, backed by positive returns and accelerated flows in the second half of the year.
Some of the biggest launches were Gaoling Natural Resources Fund ($250 million) from Hillhouse Capital, Hareion Fund ($220 million) from Areion Asset Management and Sertorius Global Opportunities Fund ($200 million) from CSAM Asset Management.
More significantly, funds such as Senrigan Capital, seeded by Blackstone, quadrupled assets to above $800 million last year.
Others such as Turiya Capital, launched by ex-Goldman Sachs executive Davide Erro and Orchard Capital, which spun-off Stark Investments in 2009, saw assets grow to close to $500 million.
Some of the other big expected launches in 2011 include funds planned by industry veteran Carl Huttenlocher who quit Highbridge Capital recently.
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.
Interest in the region is on the rise with the Asia Pacific emerging as the top-ranked geography for net investor demand in 2011, according to a survey released by the prime broking unit of Credit Suisse earlier this month.
Nearly half of the more than 600 investors surveyed by Credit Suisse said they had demand for exposure to the region which contributes about a fifth to the global hedge fund assets of about $1.9 trillion.
(Editing by Ken Wills and Vinu Pilakkott)