Gottex joins ex-Blackstone, Goldman execs to seed Asian hedge funds

Reuters

By Nishant Kumar

HONG KONG, Oct 8 (Reuters) - Swiss fund-of-hedge-fundsmanager Gottex is partnering with two former executivesof Blackstone Group and Goldman Sachs to backAsian hedge fund managers starved of capital since the globalfinance crisis.

Gottex, via a partnership with Headland Strategic Ltdfounded by Michael Garrow, an ex-Blackstone executive, andJohannes Kaps, who earlier worked at Goldman, will offer hedgefund managers as much as $75 million each from next year. Itaims to help them individually build a start-up capital of atleast $100 million.

The scale of the initial financial backing is substantial. Atypical seed investment in Asia has remained around $25 millionin recent years.

Seeders usually pocket 20-30 cents of every dollar earned bya hedge fund in addition to their share of the return generated.Many smaller managers and those looking to start in Asia arewilling to share revenues in exchange for long-term capital.

Gottex, via its partnership with Hong Kong-based Headland,plans to start seeding funds by the first quarter of next yearand back two to three managers every year.

"The aim is for Headland Strategic to make fairly large dayone investments," Gottex co-founder Max Gottschalk told Reuters."We want to help each fund launch with a minimum of $100million, a critical amount of capital for hedge funds to surviveand grow in Asia."

The partnership has also roped in V-Nee Yeh, co-founder ofHong Kong-based money manager Value Partners, andother investors to commit cornerstone capital to HeadlandStrategic, Gottex's Gottschalk said.

"Asian dedicated hedge fund assets have seen virtually nogrowth since the global financial crises, creating an idealenvironment for us to negotiate... with top-tier portfoliomanagers," Kaps said.

Three-quarters of Asia's 1,300 hedge funds manage less than$100 million, according to data from tracker Eurekahedge.

Headland will compete with the likes of Woori AbsolutePartners and Ascalon Capital, a unit of Australia's WestpacBanking Corp, in seeding managers in Asia.

Asian hedge funds as measured by Eurekahedge returned anaverage 9.7 percent through September in 2013, outperforming a1.4 percent drop in the MSCI's index of Asia-Pacific sharesoutside Japan during the period.

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