February 24, 2011 / 7:12 AM / 7 years ago

Ex-Goldman Sze step closer to $1 billion-plus hedge fund

HONG KONG (Reuters) - Former Goldman Sachs Group Inc (GS.N) star trader Morgan Sze moved a step closer to the launch of his $1 billion-plus hedge fund, registering Azentus Capital with the Hong Kong market regulator this week.

Hong Kong-based Sze, head of Goldman’s Principal Strategies group, was with Goldman Sachs (Asia) L.L.C. until February 16 and started at Azentus Capital on February 21, filings with the Securities and Futures Commission in Hong Kong show.

The fund comes as Goldman and other Wall Street banks shut proprietary trading desks in light of the “Volcker rule,” which limits the risks banks can take with their own capital in the wake of the global financial crisis.

Sze is building a team of close to 30 to run Azentus Capital, which is expected to be one of the biggest hedge fund launches since the onset of the credit crisis and one of the most high-profile in Asia.

The hedge fund is expected to be launched in the second quarter.

The filings also show Roger Denby-Jones, former chief executive of Asia-focused hedge fund Boyer Allan Investment Management, joined the fund, which plans to adopt a number of investment strategies including equity long-short, risk arbitrage and special situation investing.

While his title is not listed, media reports said Denby-Jones joined as chief operating officer.

Others in the six-member team registered with the regulator include former Goldman Sachs (Asia) executives Bruce Kirk, Mohan Rajasooria, Jenny Sun Kin-nam and Jeffrey Zielinski.

“We believe that Asia is on the verge of getting its very own post-crisis, home-grown billion dollar club, and expect that high-quality, institutional new entrants such as Azentus will add significantly to it,” said Aradhna Dayal, editor of industry tracker AsiaHedge based in Hong Kong.

Sze, who reportedly received a bonus of almost $100 million in 2006, has taken office space in ICBC Tower, one of Hong Kong’s most famous office complexes, the filing said.

    Interest in hedge funds is rebounding with assets under management globally rising a record $149 billion in the December quarter, helping the industry almost regain its pre-crisis level of $1.9 trillion, according to data from Hedge Fund Research.

    Assets raised by new hedge funds in Asia surged nearly 50 percent to $3.84 billion in 2010 from a year earlier, while the average launch size rose to $40 million from $33 million, a survey by AsiaHedge shows.


    Goldman’s prop desk saw a number of departures last year, including Pierre-Henri Flamand, who ran Goldman’s Principal Strategies division before Sze, setting up Edoma Partners having raised more than $1 billion, media reports say.

    Others include Morgan Stanley (MS.N) spinning out FrontPoint Capital, while JPMorgan (JPM.N) is reassigning its proprietary traders to its asset management unit.

    In October, private equity firm Kohlberg, Kravis Roberts & CO (KKR.N) hired nine members of Goldman’s prop trading team, while a Credit Suisse CSGN.VX commodity trader departed with a team of proprietary traders in September to set up a hedge fund. Bank of America Corp (BAC.N) has also cut staff who traded for the bank’s account.

    Editing by Chris Lewis and Dhara Ranasinghe

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