Investcorp, an alternative asset manager, is looking to sponsor hedge fund managers in the credit and commodities space, according to Deepak Gurnani, head of the firm’s hedge fund business.
Investcorp launched its hedge fund seeding program roughly seven years ago. So far they have invested approximately $1.7 billion in capital in five hedge funds that employ a variety of strategies, including global macro, convertible arbitrage and European event-driven. The latest was Ballast Capital Management LP, a hedge fund launched by several former Ramius LLC staff. Ballast is based in New York and specialized in long-short equity. It is led by Chief Investment Officer Robert Kaynor and President Ryan M. O’Sullivan.
Investcorp typically invests between $50 million and $100 million with a manager in its seeding program, according to an article in the Wall Street Journal online. Investcorp itself has $4.7 billion in hedge fund assets and has a history of helping experienced hedge fund managers launch their own firms.
Hedge fund seeding has picked up pace given the challenging environment right now for fundraising. Regulatory changes are also limiting banks’ ability to do proprietary trading, which is turning many experienced traders out into the street to look for new opportunities.
It’s a win-win situation for new hedge fund managers. In addition to the capital, they can often tap into the marketing and sales infrastructure provided by the seeding firm, as well as its client base. According to Robert Kaynor who’s quoted in the article, “Partnering up with a well-known and stable organization, and the scale out of the gate, certainly has advantages around fundraising moving forward.”
What’s your opinion? Would you be ready to switch hedge fund jobs or make a move to launch your own firm if you had access to seed capital? Add your comments below.