February 23, 2012 / 9:51 AM / 6 years ago

UPDATE 1-Ex-Kingdon exec readies Samena-backed Asia hedge fund

By Nishant Kumar

HONG KONG, Feb 23 (Reuters) - Wuzhu Asia Partners, founded by former director of Asia research at New York-based multi-billion dollar hedge fund Kingdon Capital Kyu Ho, is set to launch a pan-Asia long/short equity hedge fund on March 1.

Wuzhu, named after an ancient Chinese coin, is backed by Hong Kong-based hedge fund seeder Samena Asia Managers, Ho, the firm’s chief investment officer, told Reuters.

“We are basically launching with their money and friends and family money,” Ho said, but declined to disclose the start-up capital citing a confidentiality agreement with Samena.

He said the fund could take in about $1 billion given its focus on liquid stocks across Asia and hoped to hit $100 million in assets by the end of 2012.

Ho, 39, who moved to Hong Kong from New York last year, is joined by Chief Operating Officer Grant Suttie, who worked at Martin Currie since 1996 and was most recently the investment operations manager at the firm in the UK.

The investment team, which the two executives plan to expand as assets under management grow, also includes Kevin Ji, a former analyst at Kingdon Capital, New York-based hedge fund Maverick Capital and Goldman Sachs.

Asia’s hedge fund industry is dominated by long/short equity funds that controlled 38 percent of its $124 billion assets at the end of December, data from tracker Eurekahedge showed.

Ho said many of the hedge funds in Asia tend to be long biased and short index to hedge. Wuzhu’s approach will be to go long and short on high conviction stock bets.

A short position means selling a security that one does not own, in the hope of repurchasing it at a lower price and making a profit from the price differential.

The fund will take long positions on 20-25 stocks and short 20-30 stocks and has the ability to go net short, meaning it can have more short positions than long positions.

“Any one point in time I have a very big book of shorts in place that are standalone shorts,” Ho said.

“These are ideas where I see weak business models and expensive stocks where the share price will fall.”

The launch comes at a tough time for capital raising for hedge funds in Asia and after a year which saw regional funds as measured by the Eurekahedge Asia long/short equities losing 10.2 percent, their second annual loss in four years.

And although new Asian hedge funds collected $4.43 billion in 2011, the highest since 2007, closures last year surged past launches for the first time since 2008, data from industry tracker AsiaHedge showed.

“We are not concerned about the Day 1 AUM. To us, this is a very long-term business. We are not going to retire in the next 2-3 years,” Ho, who was born and raised in Singapore, said.

Wuzhu has picked Goldman Sachs and Morgan Stanley as prime brokers.

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