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Summit News

Vision raises $55 mln for fund incubator

HONG KONG (Reuters) - Asian fund of hedge funds manager Vision Investment Management has so far raised about $55 million for its new vehicle which will seed and incubate hedge fund start-ups, a senior Vision executive said on Wednesday.

The firm’s Vision Angel Fund is likely to invest with its first two managers within 30 to 45 days, added Julius Wang, a managing director with the Hong Kong-based firm.

“We officially launched in February. Our target size is going to be $100 million to $150 million,” he told the Reuters Hedge Funds and Private Equity Summit in Hong Kong.

“We see that the portfolio will probably be 10 managers, plus or minus two on either side.”

Wang said one of the target firms is a long/short equity fund manager and the other a market neutral equity fund.

With $1.5 billion in assets under management at the end of last year, Vision is one of Asia’s largest home-grown fund of hedge funds managers. The firm was one of the first chosen by CalPERS after the biggest U.S. public pension fund began investing in Asian funds of hedge funds in late 2005.

The class A shares of its flagship $800 million Vision Asia Maximus Fund had an annualized return of 12.61 percent from its launch in March 2002 to the end of February.

Julius Wang, president of Vision Investment Management (Asia) Limited, smiles during the Reuters Global Hedge Fund/Private Equity Summit in Hong Kong April 11, 2007. REUTERS/Paul Yeung

Wang joined Vision last year with a mandate to launch the angel-investing platform. He said the fund would be similar to a private equity vehicle in that it focus on multi-year investments. The fee structure would also be similar to that of a private equity fund, though he declined to give details.

The fund would both seed the start-ups with capital and help develop the business side of their operations. He said Vision would prefer to share in revenues rather than take equity stakes in new managers.

REVENUE TARGETS

Wang said the new fund would target returns of roughly twice the 12 to 15 percent it aims for in the Vision Asia Maximus Fund. He thought this was possible because data has shown smaller managers early in their lifecycle tend to outperform.

“If you’re managing $25 million or $50 million, you can go in and out of a particular stock without leaving a footprint,” he said.

“The other effect, simply put is really that the managers are hungry. They’re just extremely motivated as they’re building their business.”

The former Ritchie Capital executive said Vision Investment also expected to complete the listing of its Vision Asia Opportunities Fund, which could raise up to 100 million pounds ($197.6 million), by late this month or early May.

The new vehicle, which will be listed on the Irish Stock Exchange and traded in London, will invest in some of Vision’s existing funds, as well as additional Asian hedge funds.

Wang said a major appeal of the fund was that it would provide a long-term source of capital. The firm plans to invest 30 percent of assets in individual hedge funds that it might otherwise avoid because of the monthly redemption feature of its existing open-ended funds.

“It’s not within our mandate to invest in certain strategies that are longer dated,” he said.

“We’ll be able get exposure to that on behalf of our clients. And these strategies would be things like distressed (debt), where you could see that taking multi-months to work out. It could be things like mezzanine financing ... special situations.”

$1=.5062 Pound

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