HONG KONG (Reuters) – A new fund management firm backed by private equity giant Blackstone Group (BX.N: Quote, Profile, Research) aims to raise $500 million to $1 billion for the launch an Asia-focused hedge fund in October, two industry sources told Reuters.
The planned launch comes after a tough 2008 for Asia-Pacific hedge funds, which have been the industry's worst performers globally since the start of this year.
Blackstone spokespeople did not immediately respond to calls and e-mails requesting comment. Blackstone, like all private investment firms targeted to institutional and high net worth investors, is barred from publicly discussing fund-raisings.
The New York-based firm announced earlier this month that it would launch Blackstone Altius Advisors, an Asia-focused investment business led by former SAC Capital Management executive Aaron Nieman.
Blackstone said that while at SAC, Nieman was instrumental in creating a successful investment team specializing in Asia Pacific merger arbitrage and event-driven investments. Before this, he worked with Lehman Brothers Holdings (LEH.N: Quote, Profile, Research) in Tokyo.
Event-driven hedge funds tend to invest in companies that are likely to benefit from one-off changes like a restructuring, share buyback, merger and acquisition activity and special dividends.
The Blackstone Altius investment team will based in Hong Kong with additional members in Tokyo, Mumbai, and New York.
LATER MAY BE BETTER
A Hong Kong-based hedge fund executive briefed on the new fund said he was told the managers are aiming to launch it Oct 1.
Speaking on condition of anonymity because of the regulatory sensitivity surround such funds, he said Blackstone Altius was looking to raise the cash from professional and institutional investors like pension funds, funds of hedge funds and the investment offices of wealthy families.
“It's quite a good idea to launch it towards the tail end of the year. Certainly if you were to launch it right now I don't think that there would be the appetite in the marketplace for a dedicated event-driven type of fund,” the executive said.
A second Hong Kong-based hedge fund industry executive whose firm had been briefed on the fund said it was understood that Blackstone would arrange to seed the fund with $50 million, with Blackstone employees putting in another $100 million.
The industry veteran said the fund was likely to see solid interest given its resources and Blackstone's reputation.
“It's a big operation. They're starting with a lot of people and a lot of money and it's quite an experienced team. It's got a lot of the things that investors are looking for these days,” the executive said.
“It's quite tough to launch at the moment. There's no doubt it makes it a lot easier if you start with $150 million of your own money.”
With many smaller managers hit by this year's market volatility and institutional investors favoring well-resourced firms, many industry watchers expect more of the growing pool of cash allocated in the Asia to go to larger, established hedge fund managers.
Blackstone has taken part in some of the largest leveraged buyouts in history and had $113.53 billion in assets under management at the end of March. This included $56.6 billion in its “marketable alternative asset management” arm, which includes proprietary hedge funds.
Asia-Pacific focused hedge funds had about $157.5 billion in assets at the end of April, according to hedge fund tracker Eurekahedge.
After producing five straight years of double-digit percentage gains, the Eurekahedge Asian Hedge Fund Index is down 5.78 percent this year. This compares with declines of 0.35 percent and 2.83 percent respectively in its North American and European indexes.
By Jeffrey Hodgson