SPECIAL REPORT SERVICE PROVIDER INTELLIGENCE ANALYSIS LAUNCHES HFMWEEK TAKES A LOOK AT THE BIGGEST PROSPECTS FOR NEXT YEAR ew managers this year have had some prett y well as family offi ces, are focused on investing in founder’s big shoes to fi ll, given that 2015 was the year share classes or anchor deals, where they can get signifi cant of the “mega launch”, explains Omeed Ma- discounts on the fees paid without taking an economic stake lik, head of BAML’s emerging manager pro- in the new fi rms. gramme and US prime brokerage distribution. “Th ere are a lot more negotiations occurring between the “Th ere were a number of anomalous, idi- endowment/foundation/family offi ce set about what the osyncratic events last year that led to some massive launches.” appropriate market rates are for new launches although not NTh ese events – such as the closure of Ziff Brothers’ hedge every launch is created equal.” fund unit and the conversion of SAC Capital Advisors into In Asia, where marquee launches have also been less prev- Point72 Asset Management – have not had the same impact alent over the last 12 months, the emphasis on fee negotia- this year. Instead, seeding activity from the likes of Reservoir tions is equally strong. Group and HS Group and the resolution of non-compete “Th ese days, if managers are not off ering a separately man- disputes have shaped this year’s list, with regulatory con- aged account, they’re considering diff erent share classes,” says straints also aff ecting the number of new ventures. Nomura’s global co-head of prime fi nance, Chris Antonelli. European consulting chiefs agree, with one London- Malik adds the fear of missing out is very prevalent in based prime adding that many portfolio managers who many allocator and prime circles. Managers that aren’t able would have considered launching their own businesses a to start with north of $500m on day one will fi nd it challeng- few years ago now prefer to launch funds within the safer ing to generate the buzz needed to create this fear. confi nes of a large fi rm. “Th ere’s an art and a science to raising capital on day one Ex-Perry Capital portfolio manager Himanshu Gulati and a lot of it revolves around creating that scarcity value joining Man Group is one such example. Another is that that then leads to the fear of missing out.” of Stephen Kirk, a former partner at Lansdowne, who was While equity-based strategies continue to dominate, with planning to set up Campden Square Capital with around 117 of this year’s 516 launches so far this year focused on $200m, but then joined former Lansdowne colleague Ross that strategy, event-driven and macro strategies also feature Turner’s fi rm Pelham Capital. frequently in this year’s crop. For the biggest starters, service providers agree that Particularly on the macro side, European prime brokers founders’ arrangements or giving up a slice of a fi rm’s equity, point to the market environment as having a signifi cant im- are now commonplace options, with at least seven of the ‘20 pact on investor demand. for 2016’ understood to have such deals in place. “It’s very macro-centric in Europe, which is interesting – “While we continue to see some very large and high-ped- the demand for macro-focused managers is high, and topi- igree launches, the type of capital is diff erent,” Malik adds. cal, given recent market events,” says the cap intro chief at He explains a number of endowments and foundations, as one prime broker. 8-14 OCT 2015 HFMWEEK.COM 3 elcome to a HFMWeek special report highlight- ing some of the regular analysis and business intelligence we provide on the hedge fund sec- tor. WOur deep network of global contacts across the alterna- tives sector help ensure our team of experienced financial journalists are on top of the issues that really matter to profes- sionals working across hedge fund prime brokerage, adminis- PAUL tration, legal, compliance and technology. MCMILLAN For example, in this special report we highlight and ana- lyse the new and upcoming launches getting the biggest [email protected] investors and cap intro heads excited. The launch section of @mcmillan_paul our magazine and website is one of our most popular features for service providers looking to stay abreast of what managers are up to. We usually cover over 30 exclusive launches each month. We also spend a huge amount of time researching and building relationships with the investor community. In this issue you can read our in-depth research on the current environment for seeders and details of the investors with the most dry powder to allocate to managers. We’ve also includ- ed our analysis of the hedge fund sector’s most influential investor names. New regulations and evolving market trends are having a FEATURE MANAGED ACCOUNTS Relatively new entrant InfraHedge has shot to the top spot huge impact on hedge fund service providers and we devote aft er amassing some $15.7bn in assets and boosting its AuM by 36.5% since 2014. Chief executive at the State Street sub- sidiary Bruce Keith says the fi rm deals specifi cally in segre- gated accounts aimed at high-value clients. “We see investors looking to increase their alternatives exposure but as a result they do want more control over the proposition, which suits us because we enable the clients to select their own structures, managers and service providers,” a significant amount of our editorial resource to keeping track says Keith. “We tend to deal with a smaller number of clients but they are likely to be signifi cant in size so they are big enough to jus- 2015 tify having their own platform.” Last year’s survey predicted signifi cant growth for the in- dustry with new entrant Decura looking to increase market share signifi cantly having surpassed the $1bn mark in its fi rst of these developments. In this special report you can read a MANAGED year of operation. However, a legal batt le with UBS eff ectively forced the fi rm to close. Decura, founded by former Goldman Sachs partner Vishal Gupta in 2012, saw its court case against the Swiss in- vestment bank draw to a close in January when a judge ruled ACCOUNTS in UBS’ favour. It is now in the midst of an ongoing disman- tling of its LLP structure and the Decura MAP. Managers on recent example of our regular survey of hedge fund admins the platform had included Markham Rae LionEye, Karyn Capital, SaltRock, GAM, Lindengrove and Aspect Capital. Th e predictions of some that Decura could amass some UNIVERSE $20bn in assets now seem a long way off . In March, Permal launched an Irish Collective Asset Man- agement Vehicle (Icav) for the managed accounts on its PMap platform, one of the fi rst to be authorised since new legislation An up and down year sees Infrahedge take the top spot in and our annual analysis of the managed accounts universe. passed in February. HFMWeek’s managed accounts universe survey, as Lyxor’s Th e move has again been made in response to European in- assets declined by 37.5% surance companies requesting products that are less punitive on capital ratios imposed by Solvency II on insurance compa- BY SAM MACDONALD nies who hold non-transparent investments. Permal head of global business development Shane Clif- t has been an up and down year for the managed ac- ford says its platform had had a high turnover of managers counts sector, with impressive growth from some and while Solvency II compliance remains a big priority when at- We also provide regular analysis of auditors, prime brokers, notable outfl ows from others. Looming capital require- tracting European investors ments set to be imposed on European insurers are start- “We have added 28 managers and removed 16 so we are ing to have a considerable eff ect on the space. very active in that regard. We are not running this for com- Although total AuM across the top 10 MAPs in- RATIONALE mercial reasons, it’s our internal buy-side platform. creased, it was only a slight rise of 1.4%, from $69.4bn to “For Solvency II and to be relevant in the insurance space I This survey does not aspire $70.4bn, while four out of those 10 saw decreases in their total you have to invest signifi cantly in risk management and tech to cover the entire managed assets. Th e latestHFMWeek survey of the managed accounts spend – that’s a growing thing, life goes more and more on- accounts sector but just those custodians, Ucits platforms and other big distribution trends. universe has seen some providers turn their focus away from shore and with that comes a heightened level of regulation. assets held at managed ac- the sector to look at new product developments such as Ucits In Europe you need to be off ering onshore vehicles and that count platforms (MAPs). HFM- and Quaif platforms. is why we opened an Icav in Dublin. We expect that it will sur- Week has defi ned a MAP as a Lyxor suff ered a big fall in assets owing to a large European pass the BVI segment of our MAP in the future.” business supporting funds or insurance company investor pulling its account, while Man In a similar vein to last year, the Sciens Managed Account accounts managed by a third Group also saw a reduction in AuM.