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. Despite last year’s table- platform falls short of the top 10 with the fi rm remaining shy party whose return stream topper, Lyxor has seen assets shrink by -37.5% largely as a re- of $1bn in AuM. Other notable absentees include: Kenmar’s is then made available to We hope you enjoy this special report and continue to sult of one client withdrawing its managed account from the CLariTy platform, QMAP and Hedge Fund Research. external end investors, either platform for “internal reasons”. Sciens is also currently launching an AIFMD structure. A directly or via a product es- Th e client in question is an unnamed large European insur- spokeswoman says: “We do not target big name managers, tablished by the MAP owner. ance player and signals what could become an important is- instead we look for high-quality emerging managers who will All AuM and fund totals have sue for managed account platforms in the coming months and be the next big name. Earlier this year we [have] established been provided by the fi rms in years as pension providers and insurance fi rms seek onshore an AIFMD-compliant structure to facilitate marketing to on- question. All data is accurate vehicles to avoid penal Solvency II capital requirements. shore European investors. We have a pipeline of managers we n as of 1 March 2015, with the engage with the HFM brand and team. Lyxor head of MAP research Philippe Ferreira says the are looking to onboard over the next six months. We continue exception of InfraHedge and fi rm has looked to add more Ucits funds to provide European our eff orts to diversify our client base and provide tailored so- FRM, which are as of 30 June fi rms with Solvency II options. lutions with the strategies on our platform.” 2014 and 31 December 2014, “We have seen outfl ows from a specifi c investor, a large Eu- Earlier this year, HFMWeek revealed a number of Ucits respectively. All YoY growth ropean insurance company that decided to relocate to other platforms were receiving requests from German insurance fi gures are based on fi gures asset classes,” he says. “What we have been doing is launching companies to be Solvency II compliant well ahead of the Janu- from last year’s survey. new Ucits funds where there is a lot of appetite.” ary 2016 deadline. 

14 HFMWEEK.COM

FEATURE HFMWEEK AUA SURVEY

24th BIANNUAL ASSETS UNDER ADMINISTRATION SURVEY PART 1 SINGLE MANAGERS

Single-manager hedge fund assets are KEY FINDINGS on the rise despite a stunted new launch market, as inter-admin transfers continue to be the best source of new business BY SAM MACDONALD 6-MONTH 12-MONTH GROWTH GROWTH ven in the six months since the last HFMWeek AuA study, the administration space has seen signifi cant change with a number of potentially industry-defi ning an- nouncements made by various players. Acquisitions, bank pullbacks and the slow- 6.6% 13.5% down in launches remain key themes for hedge fund ad- Eministrators, although the dominance in assets from some TOTAL A u A TOTAL A u A of the larger players, namely State Street, Citco, BNY and APR 15 APR 15 SS&C remains evident. Total assets have risen by 6.5% in six months and 13.5% $5.03trn $5.03trn over a 12-month period indicating a generally steady rise for many admins. TOTAL A u A TOTAL A u A Some 17 admins have risen in the rankings and 16 ex- OCT 14 APR 14 perienced a fall in position, while 27 remained in the same place as in the last study. A total of 33 fi rms saw percentage $4.72trn $4.43trn increases in total assets over six months. An obvious talking point in the administration space

TAKING THE PULSE OF THE ADMIN SECTOR

WHAT IS THE BIGGEST DRIVER OF WHAT IS THE BIGGEST CAUSE OF HAS THE NUMBER OF HEDGE FUNDS HOW DOES YOUR FIRM VIEW RECENT M&A NEW BUSINESS CURRENTLY? HEDGE FUNDS ISSUING RFPS? LOOKING TO CHANGE ADMINISTRATOR ACTIVITY IN THE HEDGE FUND ADMIN SPACE? INCREASED IN THE LAST SIX MONTHS?

35 + C +33257+ 64 C+279 73 +27C l GOOD58 – IT IS A SIGNAL OF GROWTH+42C AND OUTSIDE INTEREST IN THE SECTOR l 58% l MANDATE WINS FROM RIVALS 35% QUALITY – DISSATISFACTION WITH EXISTING PROVIDER 64% l INDIFFERENT – ACQUISITIONS ARE l NEW PRODUCTS FROM EXISTING l COST – TO SEE IF A DIFFERENT FIRM HEALTHY BUT CAN CAUSE INSTABILITY CLIENTS 33% MIGHT BE CHEAPER 27% 42% l HEDGE FUND LAUNCHES 25% l COST – TO DRIVE A HARDER BARGAIN l YES 73% l BAD – PURCHASED ADMINISTRATORS l REGULATORY SOLUTIONS 7% FROM EXISTING PROVIDER 9% l NO 27% RUN THE RISK OF LOSING CLIENTS 0%

18 HFMWEEK.COM

HFMWEEK.COM 3 ANALYSIS LAUNCHES

HFMWEEK TAKES A LOOK AT THE BIGGEST PROSPECTS FOR NEXT YEAR

ew managers this year have had some pretty well as family offices, are focused on investing in founder’s big shoes to fill, given that 2015 was the year share classes or anchor deals, where they can get significant 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 firms. gramme and US prime brokerage distribution. “There are a lot more negotiations occurring between the “There were a number of anomalous, idi- endowment/foundation/family office set about what the osyncratic events last year that led to some massive launches.” appropriate market rates are for new launches although not NThese 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 “These days, if managers are not offering a separately man- disputes have shaped this year’s list, with regulatory con- aged account, they’re considering different share classes,” says straints also affecting the number of new ventures. Nomura’s global co-head of prime finance, 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 find it challeng- few years ago now prefer to launch funds within the safer ing to generate the buzz needed to create this fear. confines of a large firm. “There’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 firm 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 firm’s equity, point to the market environment as having a significant 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 different,” 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 ANALYSIS LAUNCHES

CASTLE RIDGE INVESTMENT former Goldman Sachs trader trading in August, Florin Court Emery’s pedigree and because chain of juice bars, seasoned MANAGEMENT Edward Eisler, this upcoming could follow in the footsteps of the low-net strategy was in industry pro Karsch is making FOUNDER: Michael Swotes macro launch has already raised Brummer spin-out Canosa. demand from investors. Sources a comeback. Equity-orientated FOUNDED: July 2015, Connecticut nearly $1bn from investors, familiar with the firm indicate Hunter Peak is interesting Swotes is known for his exper- according to reports, and is a GLEN POINT CAPITAL the $150m founders’ share class because of the “empirical tise in real estate stocks, having client on the shopping list of FOUNDERS: Neil Phillips, was oversubscribed and that business understanding” Karsch most recently led relative-value several investment banks. “It’s Jonathan Fayman the firm should reach its soft- got from his break, one prime investments in that sector at one we want,” one European FOUNDED: September 2015, close target of $500m within a tells HFMWeek. Members of Carlson Capital and his own consulting chief told HFMWeek, London few months. HPI’s team include head trader firm will run a similar strategy. indicating Eisler was one of The second of three macro Matthew Plotkin, who spent 13 Swotes has received backing only six new firms they want to launches in this year’s 20, Glen HUDSON EXECUTIVE CAPITAL years working at $3bn Karsch from influential seeders Reser- work with on a primary basis. Point will have an emerging (HEC) Capital, and former Magnetar voir Group as well as Starwood Eisler, who headed up currency, markets slant and run a strategy FOUNDERS: Doug Braunstein, analyst Tom Tully, senior analyst Capital founder Barry Sternlicht’s interest rate and commodities similar to the $1.4bn fund Phil- Jim Woolery and research partner. family office. Primes estimate trading at Goldman, reportedly lips and Fayman co-managed FOUNDED: January 2015, Castle Ridge is coming to market has a 12-strong team and will at their former employer, New York KINTBURY CAPITAL with “several hundred million”. start trading in Q1 2016. BlueBay. Reportedly launching “This firm has good pedi- FOUNDER: Christopher Dale The start-up is using Starwood’s early next year, the duo have gree” says one prime about FOUNDED: March 2015, London office space and infrastructure, EVERETT CAPITAL ADVISORS brought on board ex-Comac this launch, set up by the JP This equity market neutral including CFO Steven Gottschalk. FOUNDER: Kelly Hampaul Capital CEO Hopewell Wood as Morgan duo. Braunstein was offering also comes highly rated FOUNDED: March 2015, London director of business develop- vice chairman/CFO at the bank and represents a key account CEDRUS PARK MANAGEMENT Ex-Taconic Capital portfolio ment, and BlueBay colleagues while Woolery was co-head of target for one bank hoping to FOUNDER: Anthony Chedid manager Hampaul told clients Alan Jacobson and Colin Read M&A for North America. The firm get in once Dale’s value-focused FOUNDED: April 2015, New York he was retiring last December as CFO and head of risk & soft-launched its “collaborative firm has “bedded down”. The An SAC Capital Advisors alumnus, but details of his new venture systems respectively. The lineup activist” strategy at the begin- ex-Millennium pro is joined Chedid was a technology surfaced earlier this year. Trading indicates the firm will be “signifi- ning of the year with a $250m by COO John Aves and CEO specialist overseeing some equities and credit at $8bn cant”, according to one service commitment from the founders Michael Burton, both previously $500m at Steve Cohen’s firm and Taconic, Hampaul’s Everett provider who can’t work with and opened to external inves- at Marble Bar. Reports indicated is in the process of getting his Opportunities Fund will focus them on account of an existing tors in August, with SEC filings that Kintbury launched with at own tech-focused venture off predominantly on European relationship with BlueBay. indicating HEC now manages least $200m, with one broker the ground. Reports from earlier event-driven opportunities, $333m across the onshore and indicating AuM could now be this year indicated he could have seeking “asymmetric payoffs GOVERNORS LANE offshore vehicles. A prestigious nearing $500m. at least $100m in commitments, across the capital structure and FOUNDER: Isaac Corré team has been drawn from with primes tipping the offering market cycles”, according to a FOUNDED: April 2015, New York Manatuck Hill Partners, High- LATIMER LIGHT CAPITAL to garner significant interest on marketing document seen by A contender for being the “big- bridge Capital Management and FOUNDER: Scott Phillips account of Chedid’s pedigree. The HFMWeek. The firm, which will gest launch this year” as far as Hoplite Capital Management. FOUNDED: October 2014, portfolio manager actually had launch this quarter, brought US managers go, according to New York two stints at SAC, and worked Myriad founding principal several prime brokers, Corré has HUDSON WAY CAPITAL Former Lone Pine managing at Citadel subsidiary PioneerPath Jonathan Summers on board in the same pedigree as Anand MANAGEMENT director Phillips has almost a Capital in between. September as head of business Desai, who’s firm Darsana was FOUNDER: Mike Hyatt decade’s worth of experience development and IR, a move one of last year’s 20. Having FOUNDED: January 2015, Texas working for Stephen Mandel’s DEEPWATER CAPITAL which “lends them credibility”, previously managed an event- Hyatt spent five years at $10bn $28bn firm. Primes say his back- FOUNDER: Mingchun Sun, one prime says. driven strategy at Eton Park, asset manager Jasper Ridge ground is valued by investors Jim Xiang Corré has brought on board Partners and also held analyst and that the firm should start out FOUNDED: May 2015 (SFC FLORIN COURT CAPITAL colleague Fenil Ghodadra as a roles at Highside Capital Man- with significant day one capital registration), Hong Kong Founders: Douglas Greenig, partner. Governors Lane, which agement and Morgan Stanley, of around $300m. The long/ Although at an early stage, this Anthony Vinitsky, Simon Nicholls, will invest in both equity and and is considered somewhat short equity strategy will focus greater China equity-focused David Denison credit opportunities, will launch of a “rising star” in Texas, ac- predominantly on US stocks. firm is generating a buzz in FOUNDED: January 2015, London with several hundred million, cording to one prime. Highside Hong Kong, not least because Set up by a trio of quants who says one consultant close to fund controller Carrie Bass has OXBOW CAPITAL they are reportedly taking latterly worked at AHL, Florin the situation, and is in the run- come onboard as CFO, having MANAGEMENT things slowly on the marketing Court is the latest addition to ning to receive a $500m ticket spent over seven years at Lee FOUNDER: Wesley Wong front. Led by former Daiwa Swedish hedge fund giant from billionaire hedge fund Hobson’s firm, which returned FOUNDED: June 2015, Hong Capital Markets chief economist Brummer & Partners’ stable. vet George Soros, according to investor capital in 2013. The US Kong Sun, primes describe this firm CEO/CIO Greenig left Man Group reports earlier this year. large cap-focused firm launched Wong lead TPG Axon’s Hong as “one to watch”. The firm in November after two years in January with around $200m, Kong operations and was there launched in July with a seed with the $79bn UK-listed firm GREENVALE CAPITAL sources indicate and its high- for over nine years, having also ticket from Ascalon, a subsidiary and has partnered with former FOUNDER: Bruce Emery turnover shorting is sought after had stints at Blackstone Group of Westpac Banking Corporation, AHL head of investment opera- FOUNDED: March 2015, London “given the markets,” one prime and Credit Suisse. His Asian lending them credibility, one tions Vinitsky, who is Florin’s COO Set up by former Naya Capital added. knowledge stands him in good broker explained. and CRO. Florin’s CTO, Nicholls, Management co-founder Emery, stead, service providers say, previously ran quant trading at Greenvale started trading its HUNTER PEAK INVESTMENTS while Reservoir Group backing EISLER CAPITAL Gloucester Research while dep- long/short equity fund on 1 Oc- FOUNDER: Michael Karsch – the first Asian manager Dan FOUNDER: Edward Eisler uty CIO Denison was previously tober. Several service providers FOUNDED: March 2015, New York Stern’s firm has seeded – is a FOUNDED: May 2015, London AHL’s head of currency trading. highlighted the venture should Following a sabbatical during strong endorsement. Wong has Incorporated earlier this year by Running $267m since it started be considered on account of which he helped build up a reportedly started with around

4 HFMWEEK.COM WHERE ARE THEY NOW? CLASS OF 2015

Abberton Capital Management: Fredrik Juntti’s Folger Hill Asset Management: Another $1bn launch, investor – thought to be UK pension consultant Cardano London-based long/short equity firm focused on Sol Kumin’s firm easily managed to raise the $400m – and now manages roughly $200m. catalysts launched in January this year with a multi-year commitment Leucadia National Corp agreed to make commitment from a US backer. Firm now manages if the former SAC Capital pro managed to match it. Pleiad Investment Advisors: Seeded by HS Group, $225m and has a healthy pipeline of investment coming Current AuM unknown. the firm founded by Ken Lee and Michael Yoshino is in, including a potential endowment ticket. understood to be running around $500m now. Kontiki Capital Management: Launched by former Ziff Aravt Global: The first large-scale launch out of Ziff Brothers, Brothers Asia head Gregard Heje, Kontiki was highly Primestone Capital: Launched by former Carlyle Group Yen Liow’s firm launched in February 2014 with over $700m rated by primes last year. Current AuM is not known. trio Jean-Pierre Millet, Franck Falézan and Benoit Colas, and quickly scaled above $1bn. Latest AuM unknown. the “constructive activist” manager received a €150m Melvin Capital: Plotkin was one of a clutch of ticket from Sienna Capital, an affiliate of Albert Frère’s Arkkan Capital Management: The offering from managers emerging from the SAC/Point72 stable. He Groupe Bruxelles Lambert earlier this year. The firm Goldman Sachs special sits pro Jason Brown has a managed over $1bn for Steve Cohen and according to now manages between $500m and $1bn. very high profile in Hong Kong and reportedly received reports last month, Melvin Capital has also reached $200m from Blackstone. Assets are now estimated to be that threshold. Sentinel Dome Partners: Tipped to potentially be the between $300m and $500m, according to one prime. biggest West Coast launch last year, Munir Alam’s firm Pagoda Asset Management: Adam Bernstein’s long/ secured an undisclosed investment from Chicago FoHF Banbury Partners: Launched By Baker Burleson and short equity firm launched last September. The firm Aurora Investment Management in October. Latest Stormy Scott, this North Carolina firm had ambitions to now manages $168m, HFMWeek understands. AuM unknown. launch with $300m. Latest assets unknown. Perdurance Asset Management: Launched by Ivan Sophos Capital Management: Jim Carruthers’ firm, BosValen Asset Management: Ken Xu’s firm reportedly Briery, Jersey-domiciled Perdurance’s progress has been specialising in short-selling, reportedly got off the launched with around $300m, some of which came kept under wraps. Thought to have launched with ground with $200m, including a ticket from the Yale from Alibaba magnate Jack Ma, according to one source. $500m, current AuM is around $900m, according to University endowment. Latest AuM unknown. The firm managed $400m as of 31 August. one prime. Squarepoint: The nQuants systematic trading spin-out Darsana Capital Partners: Anand Desai’s firm came to Saferidge Capital Partners: Paul Saferstein’s from Barclays got off the ground in January, opening market having raised $1.2bn, and now runs roughly $2.5bn, Asia-focused firm did not quite get the traction offices in London, New York and Singapore among making it one of last year’s most successful launches. anticipated, with one prime indicating the firm’s others. AuM unknown. anchor investor pulled out. Emails to the firm remain Immersion Capital: Michael Sidhom launched his unanswered. Two Creeks Capital Management: Ryan Pedlow’s firm London-based equities firm with around $600m, rivalled Darsana and Folger Hill in terms of start-up including some backing from his previous employers Ziff Seven Harbour Global: Sean Grogan’s long/short equity capital raised, reportedly $1.5bn. Latest AuM not Brothers. Latest AuM unknown. strategy managed to get up and running with an anchor known.

$200m, with one prime describ- SAND GROVE CAPITAL just under $100m and now kind of pedigree.” It isn’t known “Investors just now are looking ing the offering as “one I would MANAGEMENT runs around $200m, according whether Sunriver will receive for quant managers – market put my money on”. FOUNDER: Simon Davies to reports. Despite starting with Ziff Brothers’ backing, as two neutral guys who know this FOUNDED: January 2015, London less than some of our other other managers who spun out space well,” says one Hong ROKOS CAPITAL Davies left Cheyne Capital in contenders, primes describe last year – Michael Sidholm Kong-based prime about this MANAGEMENT September 2014, having spent the team, which also includes and David Fear – did, but duo, who have come from Mac- FOUNDER: Chris Rokos 11 years there, and oversaw COO Steve Banner, previously one source indicates he may quarie Securities and BlackRock FOUNDED: March 2015, London a $1bn-plus event-driven at Peloton Partners, and head be able to capitalise on the respectively. Their chances of One of the biggest launches strategy for the firm alongside of ops Andrew Freshney, former fact that this year has seen a success are enhanced by their of the year and one which co-manager Michel Massoud. Highgate Investment Manage- “more concentrated” number of HS Group/Gottex backing, un- has primes on both sides of Massoud has just launched ment COO, as “professional”, high-profile US launches. Cook derstood to be around $200m the Atlantic excited, the former Melqart Asset Management, but with Arbib’s proven “money- has hired former JAT Capital of their $250m assets. Zentific Brevan Howard partner’s of- sources believe Davies will fare making experience” a good Management CFO Justin Morgan also has in its favour the fact fering went live on 1 October. better, as Sand Grove received a indicator of things to come. in the same role. that several of its peers in the AuM estimates range, with one seed ticket of around $250m. pan-Asian market neutral space, service provider indicating Rokos SUNRIVER MANAGEMENT ZENTIFIC INVESTMENT such as Sensato or Macquarie, started with around $2.5bn SEALIGHT CAPITAL FOUNDER: Will Cook MANAGEMENT are hard-closed to new invest- of which $700m is personal FOUNDER: Simone Arbib FOUNDED: June 2015, FOUNDERS: Burke Lau, ment. “Anyone who wants wealth; on par with a few of last FOUNDED: December 2014, Connecticut Christopher Lee access to this strategy has to year’s 20. His former employer London Former Ziff Brothers sector FOUNDED: March 2015, Hong Kong go to Zentific.” has also taken a stake. With Considered highly in hedge head Will Cook has received a host of former Comac and fund circles, Arbib left Ivaldi in plenty of interest from potential CRITERIA Brevan Howard employees on June 2014 alongside equity pros investors for his long/short To qualify for consideration, hedge fund management firms must the books, the global macro firm Marco Gennari and James Miller. equity offering, according to one have been registered in the 12 months between 1 September 2014 is “in a different league” to other Sealight’s European Opportuni- prime in the know. “People have and 31 August 2015. The chosen 20 are those deemed most likely launches this year, the service ties Fund, a low net long/short wanted to meet him – they’re to achieve significant future success, based on conversations with provider added. equity offering, launched with interested in anyone with that senior industry professionals and HFMWeek’s editorial judgement.

HFMWEEK.COM 5 ANALYSIS TOP 5 SEEDERS

THE HFMWEEK SEEDING TOP 5

While several big names have been relatively quiet, 2015 has Anderson, a senior associate in the business transactions nevertheless recorded considerable activity in the seeding of group at Seward & Kissel, who specialises in seed deals. “There’s obviously a strong interest in recycling their emerging hedge fund managers. Our sixth annual HFMWeek powder into more deals – redeploying it to new managers seeding analysis looks in detail at the top five seeders to and ‘purchasing’ additional revenue sharing. For this watch over the year ahead reason, we expect there to be a lot more activity next year by the institutional seeders.” BY CHRIS JOSSELYN Blackstone is expected to resume seeding activity in Q1 2016 when it begins deploying from its Strategic Alliance ith big-name players quiet so far III vehicle, which it began marketing to investors in in 2015, one could be excused for February this year. It had $655m invested as of October. thinking that there has been a lull in Titan Advisors is also understood to be raising capital activity in the seeding space. for a seed vehicle that could begin deploying in 2016. Blackstone is understood to have The Stamford, Connecticut-based FoHF is targeting largely deployed the funds from its $500m for the fund, and is still finalising the exact timeline Strategic Alliance II seed vehicle, and so far this year, it is for the launch with a number of key investors. Wyet to register a single big-ticket deal, although it is in asset However, the lack of activity this year by the giants of raising mode for its third seeding vehicle. the space does not mean seed capital has dried up. Indeed, Another big name, Reservoir, is also understood to be HFMWeek’s sixth annual review of the seeding space reveals inactive in seeding managers for the moment. In 2014 that at least $830m of seed capital has been deployed by the it allocated $200m to London-based activist Abberton top five seeders over the past year compared to $1.2bn in Capital. 2014. The top five seeders have over $2.3bn of dry powder Grosvenor, too, has exhausted its own supply of dry to put to work , compared to $2bn last year. powder after making just one deal in the past year, seeding “I’m not sure it’s quieter, there is just less programmatic New York-based Hollis Park Partners with $50m in seeding, and more ad hoc. In Europe and the US there isn’t December 2014. anyone active in a big purposely raised fund deploying “Many of the major seeders will have significant amounts assets at the moment, but there are a number of seeders of cash released from lock-ups relatively soon relating to asset-raising,” says Erik Serrano Berntsen, CEO and co- deal activity they did one to three years ago,” says Gerhard founder at Stable Asset Management.

6 HFMWEEK.COM “But I don’t think that’s symptomatic of anything to do with the space, because it still remains pretty active 05 DROBNY CAPITAL DRY POWDER in terms of new launches; there is appetite for seeding as demonstrated by asset-raising of some dedicated funds, $200m+ and ad-hoc seeded managers are getting traction.” Santa Monica, California-based Drobny Capital “Of those who have been most active recently, it’s committed $150m to a single undisclosed seed deal DEALS IN THE LAST 12 not one or two large seeders who are doing multiple in the second quarter of this year. MONTHS: deals; rather we’re seeing an awful lot of family offices, It has a focus on macro strategies, as Ben Savage, 1 endowments, and similar groups doing opportunistic managing director at Drobny, explains. deals, the genesis of which seems to be relationships that “We think that macro strategies in particular, offer a they’ve historically had with managers,” says Seward & degree of insight and informational value for investors Kissel’s Anderson. that other hedge fund strategies typically do not, and we’ve developed our London-based Tages Capital has led the way in seeding approach to allocating to those strategies with the design of trying to harvest that activity over the past year, allocating more than $400m insight from relationships that you can build with macro hedge fund managers with across six deals. “For Tages, seeding was a natural extension to the the idea that as an allocator, you can use that information flow and that insight fast-growing and successful alternatives business we are about capital markets, to help you more broadly across your investing activities.” focused on building, an activity that leverages off of our In terms of dry powder, Drobny has a target deal size of $200m, and it has deep manager research and operational due diligence capacity to seed between one and three of these each year. capabilities and our experience of finding and investing The firm was founded in 2007 and is led by hedge fund industry veteran in emerging managers, which has been a focus since the Steve Drobny. inception of Tages”, the company’s CEO Jamie Kermisch tells HFMWeek. economics. Every deal we have done has been bespoke “We spend a lot of time on trying to understand the and highly negotiated, with the objective of partnering manager’s goals and needs before any discussion on with the manager as they build out their business. We think that is one of the ways that we have differentiated ourselves as a seed investor”, says Tages’ head of seeding strategies Mark de Klerk. TOP 5 12-MONTH SPEND Over the next 12 months, Tages has at least $600m of dry powder to deploy, and Ucits funds are a particular focus for year-end into 2016. 12-MONTH SPEND “We’re open to reviewing any strategy that is able to provide good long-term risk-adjusted returns and is scalable DEALS relative to the seed investment made,” adds de Klerk.

OFFERING SOMETHING DIFFERENT Some seeders, by not investing out of a dedicated private- TAGES CAPITAL equity-style vehicle, offer something different to the usual $400M+ powerhouses. One such firm is $2bn New York-based 6 Protégé Partners. “One of the things that differentiates us from many traditional seed funds is that our seeds go within our commingled funds and customised fund-of-ones who are syndicated co-investors with those seeds,” says Michael Weinberg, chief investment strategist at Protégé Partners. NEWALPHA ASSET “Unlike a private equity fund, where they may pull the MANAGEMENT seed capital after the two- or three-year period, we’ve $197M actually historically invested with our seeds beyond that 5 period.” London-headquartered Stable Asset Management seeds from its balance sheet and, as such, has no set level

DROBNY CAPITAL $150M 1 THERE IS APPETITE FOR SEEDING AS DEMONSTRATED BY ASSET-RAISING GROSVENOR CAPITAL MANAGEMENT OF SOME DEDICATED FUNDS, AND $50M 1 AD-HOC SEEDED MANAGERS ARE

STRIDE CAPITAL GETTING TRACTION $30-50M (EST.) ERIK SERRANO BERNTSEN, STABLE ASSET MANAGEMENT 1

” HFMWEEK.COM 7 ANALYSIS TOP 5 SEEDERS

NEWALPHA ASSET DRY POWDER WE DO HAVE DRY POWDER, AND WE 04 MANAGEMENT ARE VERY ACTIVELY WORKING TO PUT Paris-based NewAlpha Asset Management has $340m deployed $197m over the past year in five managers, DEALS IN THE LAST 12 MORE MONEY TO WORK. OUR PACE including US managers Sabal Capital Management, MONTHS: Steamboat Capital Partners and Quest Global 5 OF INVESTING IS DOING ONE OR TWO Advisors; and French managers Finaltis EfficientBeta [SEED DEALS] A YEAR and Fideas Capital. DON ROGERS, STRIDE CAPITAL “One of the key differentiators of NewAlpha compared to our peers is that we have been consistently active [in seeding] since we started more than 10 years ago,” says Philippe Paquet, managing partner at NewAlpha Asset Management. of dry powder, which Serrano Berntsen explains allows it He adds that NewAlpha has seeded an average of 4.5 deals per year since ”to be a more opportunistic seeder. 2009 and has deployed a total of $900m in seed and acceleration capital in that “We have capital that if we feel there is a compelling period. opportunity to deploy, we will. But we don’t have to The French seeder’s dry powder for emerging hedge fund managers going deploy in the sense that we don’t have a seed fund with an forward is $340m. investment period or raised dedicated capital or anything NewAlpha is 40% owned by $60bn asset manager La Francaise, 35% by $670m like that. We have been looking for opportunities, though,” partnership NewAlpha Partners, and 25% by $73bn OFI Asset Management. he says. Stable Asset Management has completed one deal in the past year, seeding Tide Pool Capital, a direct lending fund focused on US consumer credit, with $20m. 03 PROTÉGÉ PARTNERS DRY POWDER This was not the only seed investment in an alternative credit manager. In October, Investcorp, which declined While $2bn New York-based Protégé Partners has $500m+ to participate in HFMWeek’s survey, seeded alternative not completed a seed deal this year, it remains an credit manager Nut Tree Capital Management with an influential player and looks to have a significant pile to DEALS IN THE LAST 12 undisclosed amount. Led by former Redwood Capital play with going forward. MONTHS: partner Jed Nussbaum, Nut Tree has a focus on distressed, 0 stressed and high-yield value credit strategy with some “We have over $500m of dry powder,” says Michael exposure to value and event-driven equity. Weinberg, chief investment strategist at the firm. “We are actively looking to do seeds and acceleration capital.” TARGET AREAS “We are doing a tremendous number of meetings with emerging managers who Seed investors often target niche strategies not found at are launching their own funds and are looking for seed capital. We also think there larger houses. are a number of interesting opportunities in acceleration capital, where managers “We believe our value is most additive to investors, that have been around for many years have proven track records and teams, but and to the industry, if we are finding strategies that aren’t they are just unable to raise capital,” says Weinberg. replicating what the very large hedge funds are doing, and In June Protégé Partners’ co-founder and co-CIO Ted Seides left the firm, leaving aren’t focused on very crowded opportunities,” says Don Rogers, founder and CEO at Stride Capital. CEO Jeffrey Tarrant as sole CIO. Seides’ departure is understood not to have had a “We’re really looking for managers that have a significant impact on the firm’s seed business, strategy or investments. differentiated strategy in some way, and we are willing to look at situations that have a capacity constraint, and not It appears that larger allocators are starting to see the all seeders are willing to do that. value in investing in emerging managers too. “Many seeders are looking to back those strategies that “Big, sophisticated investors are now coming to us have the biggest capacity, that can get really big, really because they are considering the idea of diversifying fast. We just think that with those types of managers it is and going with smaller managers,” says Philippe Paquet, going to be harder for them to produce outperformance managing partner at NewAlpha Asset Management, in the funds. What we’re doing is focusing on a different which has provided seed capital of nearly $200m across opportunity.” five deals over the past year. Stride Capital, which typically invests $30m-50m per He explains that big investors are increasingly finding deal, seeded David Rockwell’s North Elm Capital in Q1 that some of the larger managers are reaching capacity, this year with an undisclosed amount. and that some have concerns about overexposure to Rogers won’t say how much dry powder his firm has certain established managers. He also says seeding new going forward. “We do have dry powder, and we are managers provides big investors with access to fresh ideas. very actively working to put more money to work. Our “They want to access new ideas in some way – the hedge pace of investing is doing one or two [seed deals] a year, fund industry is quite a mature industry, and when you sometimes three or four if we’re really active.” launch a fund you generally have a strong or disruptive Managers outside Europe and the US are also benefiting idea. For investors it’s a way of setting up an observatory from seed capital. In the summer, for example, Swiss on the industry.” FoHF Gottex partnered with Hong Kong-based investor Many of the seeders HFMWeek spoke to view HS Group to seed Zentific Investment Management, themselves as a crucial source of capital in volatile times which is understood to have launched in August with for emerging managers. around $150m in assets. “When you get market distress, like we’ve had over

8 HFMWEEK.COM 02 TAGES CAPITAL DRY POWDER TOP 5 London-based Tages Capital has had a busy year, allo- $600m+ DRY POWDER cating more than $400m across six deals, including over $100m to Palmerston Capital, over $100m to Deutsche DEALS IN THE LAST 12 MONTHS: Bank Insurance-Linked Strategies, $70m to Integrated 6 Macro Management, and €20m ($21.5m) to the Quantica Managed Futures Ucits fund, on the Morgan Stanley FundLogic platform. Tages would not comment on two further deals it has seeded this year, as these 1 have not yet been made public. BLACKSTONE Building on this activity, Tages has at least $600m to deploy over the next year. DRY POWDER “The dry powder is available from different mandates and different institutional cli- $700m+ ents diversified by type and geography, so depending on the nature of the invest- ment we’re making, we may draw from different capital pools”, says Tages CEO Jamie Kermisch. Seeding further Ucits funds is one aim for the year ahead. “Currently the focus is on equity long/short managers, event-driven and macro with a short-term priority on established managers looking to launch a Ucits fund. However, we also continue to look to source new differentiated start-up managers or investment teams”, says Mark de Klerk, head of seeding strategies for Tages. 2 01 BLACKSTONE GROUP DRY POWDER TAGES CAPITAL $700m+ DRY POWDER While Blackstone was not forthcoming with information, $600m+ it is understood that it has largely deployed the funds DEALS IN THE LAST 12 from its Strategic Alliance II seed vehicle. It had raised MONTHS: around $2.4bn and completed 13 deals by the end 0 of 2014, investing $600m last year in Robert Dafforn’s London-based Bybrook Capital, Mark Black’s Raveneur Capital and Arkkan Capital, an Asia-focused fund run by ex-Goldman Sachs executive Jason Brown. Blackstone has however been active raising assets for its latest hedge fund seeding vehicle, Strategic Alliance III (SA III), which it started marketing to investors in February with a target of $1.5bn. By October of this year, SA III had $655m invested. 3 If previous seeding activity is anything to go by, once New York-based Blackstone PROTÉGÉ starts allocating from SA III, 2016 could be a busy year after a quiet 2015. PARTNERS Prior to its $600m of seed deals in 2014, its previous seed vehicle Strategic DRY POWDER Alliance II also backed Princeton Alpha Management in 2013 after its founder, Shakil $500m+ Ahmed, spun out of Citi, while the Blackstone Strategic Alliance I closed in 2007 with over $1bn of assets raised. Blackstone’s three seeding vehicles have now invested more than $6bn in hedge funds. the past few months, people tend to reach out to us. We are a source of capital stability, we view ourselves as great 4 partners, and you often have smaller emerging funds that NEWALPHA value a partner,” says Stride Capital’s Rogers. “Our phones ASSET are ringing off the hook.”n MANAGEMENT DRY POWDER This survey does not aspire to cover all hedge fund seeding activity, $340m just those deals completed by dedicated platforms and vehicles with pools of capital dedicated to seeding. To be eligible, said vehicles should include external investment or be prepared to open to outside 5 investment. The information in this survey has been collated from interviews with industry experts and in-house research. For those firms DROBNY in the dry powder rankings for which ticket sizes for completed deals CAPITAL were unavailable, the average ticket size was calculated by HFMWeek DRY POWDER and subtracted from the allocated total available. The survey covers $200m+ the 12 months from November 2014 through October 2015.

HFMWEEK.COM 9 FEATURE INVESTOR POWER 30 27 NEW JERSEY STATE INVESTMENT COUNCIL PENSION (US) Total fund AuM: $81bn Hedge fund AuM: $8.9bn Key figure: Chris McDonough (pension director)

New Jersey edges out neighbouring scheme New York City Retirement Systems 2015 as one of the most powerful hedge fund investors among US public pensions. In 2014 POWER the $81bn scheme commit- 30 ted $1.35bn to 11 funds and its investment committee is FoHFs, ending the year with HFMWEEK REVEALS WHO’S MADE THIS expected to agree on a long- a diversified portfolio of more YEAR’S INVESTOR POWER 30 LIST AND term strategy. than 40 funds. WHAT THEY ACHIEVED IN 2014 30 BY CHRIS JOSSELYN CALIFORNIA STATE TEACH- ERS’ RETIREMENT SYSTEM (CALSTRS) 29 25 HFMWeek’s Investor Power 30 returns PENSION (US) KOREA NATIONAL PENSION THE ALL PENSIONS GROUP (APG) for its third instalment, presenting 30 of Total fund AuM: $190.8bn SERVICE (NPS) PENSION (NETHERLANDS) Hedge fund AuM: $864m PENSION (SOUTH KOREA) Total fund AuM: $451bn the most influential hedge fund investors Key figure: Christopher Ail- Total fund AuM: $428bn Hedge fund AuM: $20.6bn and advisers. As always, comparing man (CIO) Hedge fund AuM: $2.1bn Key figure: Paulus Ingram influence in the industry has proved Key figure: Wan-Sun Hong (head of hedge fund invest- At the end of 2014 Calstrs (CIO) ments) a tricky and highly subjective activity, extended by a year its hedge but discussions with prime brokerage fund experiment that it had The NPS’s decision last Following the decision of executives and hedge fund professionals, begun in 2011, showing month to commit 0.5% of its Dutch counterpart PFZW there are still big Californian its assets to hedge funds to pull out of hedge funds combined with HFMWeek’s editorial pensions interested in hedge may appear a somewhat in January, APG has shown nous and a survey of our readers, have funds post-Calpers. The tentative step, but given no signs of diminishing helped us derive a countdown of the $191bn scheme will now the gargantuan size of the its interest in the space. A players whose opinions and decisions continue investing in hedge scheme this will make it champion of good govern- funds until September or one of the biggest allocators ance and responsible invest- carry the most clout. November this year when in the region. ment, APG is involved in the Two influential pension funds with sizeable hedge fund allocations (Calpers and PFZW, with allocations of $4bn and AON HEWITT $5bn respectively) have pulled out of the Chicago-headquartered space since the publication of last year’s Aon Hewitt is a stalwart list. However, initial fears from some that 28 general investment an avalanche of institutional investors consultant and has a CONSULTANT (US) solid base of hedge would make copycat redemptions Hedge fund AuA: $30bn fund-investing clients in have not been realised – indeed, a Hedge fund AuM: $2.8bn both the US and Europe. (different) Californian public pension and Key figure: Peter Hill pic( - Its discretionary business tured, global head of liquid has grown in recent years, Dutch scheme both figure in this year’s alternatives) helping provide more of countdown. its smaller investor clients We hope this year’s ranking will with access to the hedge stimulate as much debate and funds universe. discussion as last year’s.

10 HFMWEEK.COM has taken its hedge fund and Kerrin Rosenberg (co- investing to a new level, founders) MORGAN STANLEY ALTERNATIVE INVESTMENT PARTNERS building on its already glob- al team spread across North Anglo-Dutch outfit Cardano Morgan Stanley AIP’s hedge and South America, Europe has only been around fund team is a sizeable and Asia, making it one of since the turn of the mil- 26 player, with over $21bn the biggest public pension lennium but it has already FOHF (US) under management and ad- hedge fund investors in firmly established itself Hedge fund AuM: $21.4bn visement combined, offering North America. as a big name among Key figure: Mustafa Jama investors both multi-strategy investment consultants. (pictured, CIO) and strategy-specific hedge Furthermore, its clients fund portfolios. Raising often have high allocations $500m for its AIP Strategic to hedge funds, across a Opportunities Fund I last 20 spectrum of managers from year has put a new vehicle VARMA MUTUAL PENSION big to small firms. at its disposal to invest in INSURANCE COMPANY hedge fund secondaries and PENSION (FINLAND) co-investments. Total fund AuM: $44bn Hedge fund AuM: $7.48bn Key figure: Jarkko Matilainen 17 (head of hedge funds) FUTURE FUND UNPRI hedge fund working from hedge funds. However, SOVEREIGN WEALTH FUND group and the Hedge Fund for the moment it remains Last year Varma, which is (AUSTRALIA) Standards Board. one of the biggest hedge the largest Scandinavian Total fund AuM: $85.1bn allocators among US public hedge fund investor, upped Hedge fund AuM: $11.9bn pensions. its hedge fund allocation Key figure: David George by 5%. Varma has been (head of debt & alternatives) prominent in its use of 24 ESG guidelines in its hedge Australasia’s biggest hedge GOLDMAN SACHS HEDGE FUND fund investments, and this fund allocator, the Future STRATEGIES 22 year will start sending a fund, has a whopping FOHF/SEEDER AXA INVESTMENT MANAGERS responsible investment 14% of its assets in hedge Hedge fund AuM: $23.3bn FOHF (FRANCE) policy to all its existing and funds, and David George, (2014 figure) Total fund AuM: $639bn prospective managers. its head of debt & alterna- Key figure: Michael Hedge fund AuM: $8.2bn tives, has been vocal in Schmelzer (global portfolio Key figure: Eric Lhomond addressing concerns of manager) (head of fund of hedge investors in hedge funds funds, impact and thematic in his role on the Hedge Goldman has a strong repu- investment) 19 Fund Standard Board of tation and long track record MESIROW ADVANCED trustees. as an influential FoHF and AXA’s FoHF business made a STRATEGIES seeder, and its own Hedge name for itself providing cus- FOHF (US) Fund Select platform boasts tomised solutions for clients. Hedge fund AuM: $13.7bn a strong line-up following a Furthermore, the struc- Key figures: Tom Macina flurry of new names at the tural changes within AXA that (CEO), Steve Vogt (CIO) 16 beginning of last year. have resulted in the insurer’s TOWERS WATSON long-only and hedge fund A number of capital CONSULTANT (US) teams working within the introduction sources spoke Hedge fund AuM: $21.6bn same group have created a of Mesirow’s clout. The vast Key figure: Damien Loveday number of synergies. majority of its assets derive (head of hedge fund 23 from institutional investors, research) TEACHERS’ RETIREMENT SYSTEM and it is particularly known (TRS) OF TEXAS as being one of the biggest With a large number of PENSION (US) FoHF havens for pension corporate pension clients, Total fund AuM: $126bn 21 fund money. Towers Watson is known Hedge fund AuM: $10.1bn CANADIAN PENSION PLAN TOP 5 for transforming its clients’ Key figure: Britt Harris (CIO) INVESTMENT BOARD (CPPIB) hedge fund portfolios by PENSION (CANADA) CONSULTANTS seeking value and hidden Texas TRS slips down the Total fund AuM: $190.8bn 1 Albourne Partners returns. Its focus on the list from seventh position Hedge fund AuM: $12bn 2 Cambridge Associates 18 smart beta concept has last year after its decision Key figure: Edwin Cass (chief CARDANO made it popular with some to reduce its hedge fund investment strategist) 3 Aksia CONSULTANT (UK/ large investors who have allocation by 1% to 8% 4 Cliffwater NETHERLANDS) become frustrated with the last September, days after Following the establish- Hedge funds AuA: $5bn performance and cost of CalPERS’ announcement ment of its own in-house 5 Mercer Hedge funds AuM: $5bn their conventional hedge that it would fully redeem hedge fund last year, CPPIB Key figures: Theo Kocken fund holdings.

HFMWEEK.COM 11 FEATURE INVESTOR POWER 30

CIC is the second biggest sovereign wealth fund in the world and is by far the biggest hedge fund alloca- TOP 5 15 tor in Asia. Since shifting 10 07 PERMAL GROUP to an ‘endowment model’ PENSIONS CLIFFWATER HARVARD MANAGEMENT COMPANY FOHF (US) of investing in 2012, it has 1 Suva CONSULTANT (US) Hedge fund AuM: $22bn had a more alternatives- Hedge fund AuA: $40bn ENDOWMENT (US) Key figures: Omar Kodmani heavy allocation strategy, 2 Ontario Teachers’ (2014 figure) Total fund AuM: $36.4bn (CEO), Clark Fenton (co-CIO), and has taken a keen 3 Varma Key figure: Stephen Nesbitt Hedge fund AuM: $5.8bn Robert Kaplan (co-CIO) interest in European hedge (CEO) Key figure: Stephen Blyth funds. 4 CPPIB (president and CEO) Permal has continued to 5 Texas Teachers’ Cliffwater continues to build build on the back of its 2012 its hedge fund client book, Harvard has upped its acquisition of Fauchier Part- which already comprises hedge fund allocation ners. The Permal managed some of the biggest US pen- by one percent to 16%, accounts platform now 12 sions that invest in hedge cementing its place as a comprises 103 accounts and MERCER funds. Last year it added hedge fund investor with $9.4bn of assets, following CONSULTANT (US) our new entrant, the $81bn clout. Its hedge fund invest- the launch of its innovative Hedge funds AuA: $30.5bn New Jersey State Investment ments seem little impacted $4bn Irish Collective Asset Hedge funds AuM: $37.7bn Council, to its roster. by the surprise departure of Management Vehicle (Icav) Key figure: Bill Muysken former CEO Jane Mendillo in March – one of the first (global CIO – alternatives) last year. to be authorised under new Irish legislation. Marsh & McLennan subsidiary Mercer is highly 08 respected in the hedge AKSIA fund world on both the CONSULTANT (US) 06 advisory and discretionary Hedge funds AuA: $58bn CAMBRIDGE ASSOCIATES 14 side. Investors particu- Key figures: Jim Vos (CEO), CONSULTANT (US) ONTARIO TEACHERS’ PENSION larly like the consultant’s Bruce Ruehl (head of Hedge fund AuA: $39.1bn PLAN (OTPP) stance on fees – Mercer portfolio advisory, Americas), Hedge Fund AuM: $3.7bn PENSION (CANADA) reportedly negotiates Valérie Bénard (head of Key figures: Gerald Kraus Total fund AuM: $113bn down management fees in Aksia Europe) (hedge fund consulting Hedge fund AuM: $10.5bn around half of the hedge practice director), Gordon Key figures: Ron Mock (CEO), fund transactions it is Aksia has recently added Barnes (head of business Neil Petroff (CIO – retiring involved in. Ohio Public Employees’ risk management) in June) Retirement System (Opers) to its non-discretionary Cambridge is coveted by OTPP is one of the largest roster and has been vocal many hedge funds as the pensions in Canada and in advocating hedge fund specialist consultant for US also one of the largest 11 transparency – such as endowment and foundation alternatives investors in GOVERNMENT OF SINGAPORE when it advised clients money. However, Cambridge Europe, where it is active INVESTMENT CORPORATION against investing in a also advises a range of in pursuing hedge fund op- (GIC) BlueCrest fund due to other investors, including portunities. CEO Ron Mock, SOVEREIGN WEALTH FUND transparency concerns. pensions, and its burgeon- a former hedge fund man- (SINGAPORE) ager himself, reaffirmed the Total fund AuM: $320bn scheme’s commitment to Hedge fund AuM: $9.6bn continue investing in hedge Key figure: Lim Chow Kiat YALE UNIVERSITY funds in January. (CIO) Legendary hedge fund The $320bn Singapo- investor CIO David Swensen rean sovereign has been 09 and his team continue to be investing in hedge funds ENDOWMENT (US) a force in the space – but 13 since 2008 and is thought Total fund AuM: $23.9bn he warned this year that in CHINA INVESTMENT to be actively allocating Hedge fund AuM: future the endowment may CORPORATION (CIC) to the space. Ray Dalio’s $4.16bn not be able to match the SOVEREIGN WEALTH FUND Bridgewater is one hedge Key figure: David exceptional returns hedge (CHINA) fund to have significantly Swensen (pictured, CIO) funds have delivered over Total fund AuM: $652.7bn benefited from GIC invest- the past 20 years, which Hedge fund AuM: $26bn ment. CIO Lim Chow Kiat have seen its assets swell Key figure: Roslyn Zhang was responsible for growing from less than $3bn in 1985 (managing director, fixed GIC’s European investments to almost $24bn in 2014. income and absolute return before taking over the top investments) role in 2013.

12 HFMWEEK.COM ing discretionary business is becoming more high-profile over time. ABU DHABI INVESTMENT AUTHORITY (ADIA) While the mysterious Adia would not confirm its exact current exposure to hedge 03 funds to HFMWeek, its es- 05 timated $38.5bn allocation SUVA SOVEREIGN WEALTH FUND INSURANCE/PENSION (UAE) makes it the largest hedge (SWITZERLAND) Total fund AuM: $773bn fund investor around. It is Total fund AuM: $50bn Hedge fund AuM: $38.5bn thought to have leeway Hedge fund AuM: $5bn Key figures: Khalifa Al Mheiri to invest up to 10% of its Key figures: Christoph Bian- (head of alternatives) huge (and ever-growing) chet (head of asset alloca- assets in hedge funds, tion), Matthias Ramser (head and has been active in the of portfolio management) space for almost 30 years. With a large in-house team ments, Adia said it was that hedge funds play in Several capital introduction focusing on hedge fund “very positive about the Adia’s overall portfolio”, in a sources described Suva as and commodity invest- unique and strategic role review last year. the talisman hedge fund allocator on the continent, which has proved itself to be both sophisticated and ALBOURNE PARTNERS reliable as an investor. The Swiss National Accident Albourne continues to be Insurance Company’s the go-to hedge fund invest- $50bn in assets comprises ment consultant for big al- the company balance sheet 02 locators, many of whom like and the Suva employee CONSULTANT (UK) its straightforward fee struc- pension fund. They are Hedge fund AuA: $350bn ture and refusal to go in for sticky investors, preferring Key figures: Simon Ruddick discretionary work. Around to stay with managers (pictured, co-founder and 550 funds, with a combined for at least two years, are CEO – stepping down AuM of $1.2bn, now report fee-sensitive, and manage in August), John Claisse on Opera, the risk reporting all their hedge fund alloca- (partner and incoming system it has spearheaded, tions in-house, without CEO), Guy Ingram (head of and while some managers consultants. hedge fund research and complain that Albourne’s co-founder); Sam Lewis influence has grown too big, (co-founder and mayor of its momentum shows little 04 Albourne Village) sign of slowing. MAN FRM FOHF (US) Hedge fund AuM: $11.3bn BLACKSTONE ALTERNATIVE ASSET Key figures: Keith Haydon MANAGEMENT (CIO), Matthew Stadtmauer (president) HFMWeek hates to be boring, but the taker of the top spot may not come as 01 that much of a surprise to readers who Man FRM has bolstered its position as a power- FOHF/SEEDER (US) remember last year’s list – nor is it to the ful hedge fund investor Total fund AuM: $290bn capital introduction sources we spoke through two high-profile Hedge fund AuM: $64bn to – as Blackstone is number one for the acquisitions in the past Key figures: Tomilson Hill second year in a row. The New York- year. Last August’s acquisi- (pictured, president and headquartered group seems to go from tion of $1bn credit-focused CEO), Halbert Lindquist strength to strength. The world’s biggest FoHF Pine Grove was fol- (chief investment strategist) discretionary allocator to hedge funds lowed up with the purchase has an AuM of $64bn in the space – up of a $1.2bn portfolio of more than 14% on last year. What’s more, multi-strategy and strategy- Blackstone committed around $600m to focused FoHFs from Merrill seeding hedge funds in 2014, making it Lynch Alternative Invest- one of the most powerful presences in ments’ in December. FRM’s the hedge fund seeding space. managed account platform boasts an AuM of $7.6bn.

HFMWEEK.COM 13 FEATURE MANAGED ACCOUNTS

Relatively new entrant InfraHedge has shot to the top spot after 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 firm deals specifically 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,” says Keith. “We tend to deal with a smaller number of clients but they are likely to be significant in size so they are big enough to jus- 2015 tify having their own platform.” Last year’s survey predicted significant growth for the in- dustry with new entrant Decura looking to increase market share significantly having surpassed the $1bn mark in its first MANAGED year of operation. However, a legal battle with UBS effectively forced the firm 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 the platform had included Markham Rae LionEye, Karyn Capital, SaltRock, GAM, Lindengrove and Aspect Capital. The 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 first to be authorised since new legislation An up and down year sees Infrahedge take the top spot in passed in February. HFMWeek’s managed accounts universe survey, as Lyxor’s The 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- notable outflows 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 effect 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 significantly in risk management and tech to cover the entire managed assets. The latestHFMWeek survey of the managed accounts spend – that’s a growing thing, life goes more and more on- accounts sector but just those 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 offering 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 defined a MAP as a Lyxor suffered 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. Despite last year’s table- platform falls short of the top 10 with the firm remaining shy party whose return stream topper, Lyxor has seen assets shrink by -37.5% largely as a re- of $1bn in AuM. Other notable absentees include: Kenmar’s is then made available to sult of one client withdrawing its managed account from the CLariTy platform, QMAP and Hedge Fund Research. external end investors, either platform for “internal reasons”. Sciens is also currently launching an AIFMD structure. A directly or via a product es- The client in question is an unnamed large European insur- spokeswoman says: “We do not target big name managers, tablished by the MAP owner. ance player and signals what could become an important is- instead we look for high-quality emerging managers who will All AuM and fund totals have sue for managed account platforms in the coming months and be the next big name. Earlier this year we [have] established been provided by the firms in years as pension providers and insurance firms seek onshore an AIFMD-compliant structure to facilitate marketing to on- question. All data is accurate vehicles to avoid penal Solvency II capital requirements. shore European investors. We have a pipeline of managers we as of 1 March 2015, with the Lyxor head of MAP research Philippe Ferreira says the are looking to onboard over the next six months. We continue exception of InfraHedge and firm has looked to add more Ucits funds to provide European our efforts to diversify our client base and provide tailored so- FRM, which are as of 30 June firms with Solvency II options. lutions with the strategies on our platform.” 2014 and 31 December 2014, “We have seen outflows from a specific investor, a large -Eu Earlier this year, HFMWeek revealed a number of Ucits respectively. All YoY growth ropean insurance company that decided to relocate to other platforms were receiving requests from German insurance figures are based on figures asset classes,” he says. “What we have been doing is launching companies to be Solvency II compliant well ahead of the Janu- from last year’s survey. new Ucits funds where there is a lot of appetite.” ary 2016 deadline. 

14 HFMWEEK.COM 10 09 08 GOLDMAN SACHS INNOCAP MORGAN STANLEY $1.98BN $3BN $3.5BN 2014 GROWTH: -6% 2014 GROWTH: 12% 2014 GROWTH: 20.7% 2014 AUM: $2.1BN 2014 AUM: $2.7BN 2014 AUM: $2.9BN NUMBER OF FUNDS: 20 NUMBER OF FUNDS: 23 NUMBER OF FUNDS: 42 INCEPTION: 2006 INCEPTION: 1996 INCEPTION: 2006 KEY FIGURE: POOJA MISHRA PRAHLAD, EXECUTIVE DIRECTOR KEY FIGURES: FRANCOIS RIVARD, CEO, XAVIER URLI, CEO OF IGIM KEY FIGURE: BEN WALKER, HEAD OF MAP

Still clinging on to its top 10 spot despite seeing Innocap increased assets by 12% in 2014, reaching Morgan Stanley’s Alphas platform has attracted assets fall slightly, Goldman Sachs External Man- its target of $3bn during that time with the number decent inflows over the last 12 months and has agers Platform has closed one segregated account of funds now standing at 23. Some 83% of Innocap’s increased its number of funds by 40%. in the last 12 months. managed account assets are now with large asset The platform is housed in the bank’s multi-asset Management of the platform has switched from owners through dedicated relationships, which repre- platform division headed up by Ben Walker and is Debora Daskivich to Pooja Mishra Prahlad during sent an increase of approximately 46% from last year. made up of 70% of European investors and 30% US the year. During 2014, Innocap added a fourth jurisdiction clients, largely institutional, large asset managers, The number of segregated accounts has fallen to its offering (Cayman Islands) and launched two banks, insurance and pension funds. to eight while the overall number of funds has additional Irish structures (one Ucits and one Qiaif). Recently added large players to the MSA platform fallen from 22 to 20 in 2014. Another development has been the creation of a include Tremblant and Two Sigma. Inflows have come predominantly from FoHFs tailor-made dashboard solution which addresses ag- The firm is predicting a $500m growth in 2015 in Europe and Asia over the past year and the gregation and simplification of complex portfolio data. with up to six funds added as investors look to firm has continued to add credit and event funds. Over the next 12 months, Innocap plans to in- managed accounts as an alternative method of ac- The platform also expects to add three new funds crease AuM to $4bn, notably through the launch of cessing hedge fund strategies. in the coming months, adding another $200m in additional dedicated structures, while adding a fifth The firm would like to add more alternative liquid assets. administrator to its platform. strategies that hold long and short positions. 07 06 AMUNDI LIGHTHOUSE PARTNERS $3.7BN $7BN 2014 GROWTH: -30% 2014 GROWTH: 11% 2014 AUM: $5.3BN 2014 AUM: $6.3BN NUMBER OF ACCOUNTS: 25 NUMBER OF MANAGED ACCOUNTS: 96 (AS OF FEBRUARY 2015) INCEPTION: 2001 (AS CASAM) INCEPTION: 1999 KEY FIGURE: LAURENT GUILLET, CEO KEY FIGURES: SEAN MCGOULD AND KELLY PERKINS, CO-CIOS

Despite celebrating its 10th anniversary this year, Amundi has seen a 30% drop Lighthouse Partners has continued its strong MAP growth from last year’s study in its MAP assets following withdrawals from some of the dedicated fund of after amassing a further $700m during the year. hedge funds it manages. The firm operates as a hedge fund allocator as well as a managed accounts The fund has 16 externally managed accounts available through the MAP platform and is seen as a pioneer in the space having launched in the US in 1999. with seven segregated managed accounts and attracted some $117m of gross The firm added one managed account during the year and continues to operate inflows during the year. a more pure FoHF-style model. During 2015, Amundi is looking to boost its MAP offering in fixed income and Florida-based Lighthouse increased its managed accounts by one over the non-directional credit as well as global macro strategies. year, taking its total to 96 while one a percentage basis growth slowed only As of the end of 2014, Amundi AI MAP was made up of 83% insurance compa- slightly from 15% last year to 11% this time round having added $700m during nies, 9% fund of funds 4% pension funds and 4% banks and wealth managers. the year. In June European head of FoHF Peter Coates joined Omni Partners as CEO.

HFMWEEK.COM 15 FEATURE MANAGED ACCOUNTS 05 04 03 LYXOR FRM PERMAL $7.5BN $7.6BN $9.3BN 2014 GROWTH: -37.5% 2014 GROWTH: -8% 2014 GROWTH: 13.4% 2014 AUM: 12BN 2014 AUM: $8.3BN 2014 AUM: $8.2BN NUMBER OF ACCOUNTS: 70 NUMBER OF ACCOUNTS: 59 NUMBER OF FUNDS: 102 INCEPTION: 1998 INCEPTION: 1998 INCEPTION: 2001 KEY FIGURES: DANIELE SPADA, HEAD OF MANAGED ACCOUNT KEY FIGURES: MICHAEL TURNER, CHIEF OPERATING OFFICER AND KEY FIGURE: ROBERTO GIUFFRIDA, INTERNATIONAL BUSINESS PLATFORM, PATRICK DA, MAP COO, MICHELLE MCCLOSKEY, SENIOR MANAGING DIRECTOR DEVELOPMENT

The big faller in this year’s study, having been the Another fall in AuM although FRM retains fourth Another strong year for the buyside MAP provider frontrunner of HFMWeek’s managed account survey spot in the list. The fall represents the second con- has pushed it into the top three Map providers over the last two years, hit by the decision of a large secutive year of net outflows for the Man Group- after cementing a place in the top five last year. European insurer to terminate its dedicated man- owned platform. Notably the number of funds has increased by aged account for internal reasons. The number of open accounts has fallen 13% 24% to 102 with assets rising 13% to $9.2bn. Last year, pension funds made up some 52% of over a period which has seen assets fall by 8% The firm made a big play to attract those assets on the Lyxor MAP. That number has fallen to to $7.6bn. This follows a 2014 fall from 83 funds hedge fund investors who may be stung by Sol - 27.5% this year while the percentage of investment and $9.2bn. vency II requirements by announcing last month from Europe has also fallen predictable significantly. Earlier this year the $280.4m Cornwall Pension to redomicile $4bn of assets into an Irish Collec - The number of accounts has fallen from 96 to 70 Fund appointed Man FRM to manage its hedge tive Asset Management Vehicle (Icav). between March 2014 and 2015. In evidence that its fund allocation. The investor group is looking to add more focus may be changing, Lyxor has enlarged its of- FRM investors benefit from enhanced trans- customized specific exposures as well as co- fering of single manager Ucits hedge funds, grow- parency through the managed account portal, investments in the coming months alongside an ing its AuM to $1.5bn. Clarus. obvious desire to boost its Icav assets. 02 01 DEUTSCHE BANK INFRAHEDGE $11BN $15.17BN 2014 GROWTH: 9% 2014 GROWTH: 32% 2014 AUM: $10.1BN 2014 AUM: $11.5BN NUMBER OF ACCOUNTS: 181 NUMBER OF ACCOUNTS: NOT REVEALED INCEPTION: 2002 INCEPTION: 2011 KEY FIGURE: MARTIN FOTHERGILL, HEAD OF HEDGE FUNDS KEY FIGURE: BRUCE KEITH, CEO

Moves up one place from 2014 having brought on an additional $900m, InfraHedge has continued its meteoric rise to the summit of this year’s managed after shedding a similar number in last year’s study following the merger of account survey as the platform added over $4bn in its latest reporting period (the its two platforms into the DeAWM Hedge Fund Platform. 12 months to June 2014). The platform now has in excess of 150 externally managed hedge funds This represents growth of 36.5% on top of an increase of 50% last time around with 181 segregated managed accounts of which 20 are for single investors. when it made its maiden appearance in the HFMWeek survey. The number of funds has actually fallen by 25% from 150 last year while The State Street subsidiary is focused on segregated accounts and is assets have risen 9% from $10.1bn. evidence of the heightened interest from investors in bespoke solutions DeAWM says it is constantly looking to add managers across all strate - from managed account providers. The firm has only been in business for four gies. The firm’s managing director and head of hedge funds Martin Fother - years and remains tight-lipped on specifics regarding the number of accounts and gill heads up the platform. shares little information besides the total AuM.

16 HFMWEEK.COM INFRAHEDGE $15.7BN TOTAL AUM OF TOP 10 MANAGED DEUTSCHE BANK ACCOUNT PLATFORMS $11BN

181

$70.4BN PERMAL $9.3BN Total AuM Number of funds 102 =10 funds

GOLDMAN SACHS 20 59 MAN FRM $1.98BN $7.6BN

23 70

INNOCAP $3.0BN LYXOR $7.5BN 96 42 25

MORGAN LIGHTHOUSE STANLEY PARTNERS $3.5BN $7BN AMUNDI $3.7BN YOY GROWTH 2014 VS 2015 $4.2BN 2014 AuM 2015 AuM % Growth

-$4.5BN +$1.1BN +$0.9BN -$0.7BN +$0.7BN -$1.6BN +$0.6BN +$0.3BN -$0.125BN

LIGHTHOUSE INNOCAP MANAGED INFRAHEDGE PERMAL DEUTSCHE BANK PARTNERS MORGAN STANLEY ACCOUNT PLATFORM GOLDMAN SACHS MAN FRM AMUNDI LYXOR

36.5% 14.6% 9% 11% 20.7% 12% -6% -8% -30% -37.5%

HFMWEEK.COM 17 FEATURE HFMWEEK AUA SURVEY

24th BIANNUAL ASSETS UNDER ADMINISTRATION SURVEY PART 1 SINGLE MANAGERS

Single-manager hedge fund assets are KEY FINDINGS on the rise despite a stunted new launch market, as inter-admin transfers continue to be the best source of new business BY SAM MACDONALD 6-MONTH 12-MONTH GROWTH GROWTH ven in the six months since the last HFMWeek AuA study, the administration space has seen significant change with a number of potentially industry-defining an- nouncements made by various players. Acquisitions, bank pullbacks and the slow- 6.6% 13.5% down in launches remain key themes for hedge fund ad- Eministrators, although the dominance in assets from some TOTAL A u A TOTAL A u A of the larger players, namely State Street, Citco, BNY and APR 15 APR 15 SS&C remains evident. Total assets have risen by 6.5% in six months and 13.5% $5.03trn $5.03trn over a 12-month period indicating a generally steady rise for many admins. TOTAL A u A TOTAL A u A Some 17 admins have risen in the rankings and 16 ex- OCT 14 APR 14 perienced a fall in position, while 27 remained in the same place as in the last study. A total of 33 firms saw percentage $4.72trn $4.43trn increases in total assets over six months. An obvious talking point in the administration space

TAKING THE PULSE OF THE ADMIN SECTOR

WHAT IS THE BIGGEST DRIVER OF WHAT IS THE BIGGEST CAUSE OF HAS THE NUMBER OF HEDGE FUNDS HOW DOES YOUR FIRM VIEW RECENT M&A NEW BUSINESS CURRENTLY? HEDGE FUNDS ISSUING RFPS? LOOKING TO CHANGE ADMINISTRATOR ACTIVITY IN THE HEDGE FUND ADMIN SPACE? INCREASED IN THE LAST SIX MONTHS?

35+3325+7+C 64+279C 73+27C l GOOD58 – IT IS A SIGNAL OF GROWTH+42C AND OUTSIDE INTEREST IN THE SECTOR l l MANDATE WINS FROM RIVALS 35% QUALITY – DISSATISFACTION WITH 58% EXISTING PROVIDER 64% l INDIFFERENT – ACQUISITIONS ARE l NEW PRODUCTS FROM EXISTING l COST – TO SEE IF A DIFFERENT FIRM HEALTHY BUT CAN CAUSE INSTABILITY CLIENTS 33% MIGHT BE CHEAPER 27% 42% l HEDGE FUND LAUNCHES 25% l COST – TO DRIVE A HARDER BARGAIN l YES 73% l BAD – PURCHASED ADMINISTRATORS l REGULATORY SOLUTIONS 7% FROM EXISTING PROVIDER 9% l NO 27% RUN THE RISK OF LOSING CLIENTS 0%

18 HFMWEEK.COM

6-MONTH 12-MONTH GROWTH GROWTH APR 14 POSITIONMOVED UP/DOWN OCT 14 POSITION MOVED UP/DOWN Apr 15 Oct 14 Oct 14 - Apr 15 Apr 14 Apr 14- AuA AuA Apr 15 AuA AuA Apr 15 ($bn) ($bn) growth (%) ($bn) ($bn) growth (%)

1 1 - STATE STREET (IFS) 806.60 780.60 3% 1 - 806.60 717.00 12% 2 2 - CITCO FUND SERVICES 657.00 638.00 3% 2 - 657.00 610.00 8% 3 3 - BANK OF NEW YORK MELLON 494.20 483.10 2% 3 - 494.20 460.10 7% 4 4 - SS&C GLOBEOP 456.00 446.00 2% 4 - 456.00 443.00 3% 5 5 - CITI HEDGE FUND SERVICES 1 325.97 325.97 0% 5 - 325.97 311.28 5% 6 6 - NORTHERN TRUST 300.35 278.71 8% 8 ▲ 300.35 139.11 116% 7 7 - MORGAN STANLEY FUND SERVICES 241.00 228.00 6% 6 ▼ 241.00 200.00 21% 8 8 - HEDGESERV 221.00 190.00 16% 9 ▲ 221.00 155.00 43% 9 10 ▲ SEI 136.30 133.60 2% 10 ▲ 136.30 128.80 6% 10 11 ▲ RBC INVESTOR & TREASURY SERVICES 125.58 125.58 0% 12 ▲ 125.58 110.36 14% 11 17 ▲ BNP PARIBAS SECURITIES SERVICES 2 118.00 51.00 131% 18 ▲ 118.00 42.30 179% 12 9 ▼ J.P. MORGAN ALTERNATIVE INVESTMENT SERVICES 117.10 139.80 -16% 7 ▼ 117.10 139.80 -16% 13 13 - MITSUBISHI UFJ FUND SERVICES 115.00 115.00 0% 13 - 115.00 100.00 15% 14 14 - US BANCORP FUND SERVICES 113.79 108.25 5% 14 - 113.79 83.42 36% 15 12 ▼ HSBC 112.80 116.42 -3% 11 ▼ 112.80 117.91 -4% 16 16 - CACEIS INVESTOR SERVICES 58.54 65.11 -10% 16 - 58.54 61.25 -4% 17 18 ▲ UBS FUND SERVICES 50.49 47.24 7% 17 - 50.49 47.27 7% 18 20 ▲ NAV CONSULTING 39.10 38.00 3% 19 ▲ 39.10 36.00 n/a 19 19 - WELLS FARGO GLOBAL FUND SERVICES 38.90 38.90 0% 20 ▲ 38.90 32.80 19% 20 21 ▲ VITEOS FUND SERVICES 35.60 35.60 0% 25 ▲ 35.60 25.68 39% 21 26 ▲ APEX FUND SERVICES 33.76 24.27 39% 27 ▲ 33.76 20.57 64% 22 23 ▲ MAPLES FUND SERVICES 31.52 29.44 7% 23 ▲ 31.52 27.17 16% 23 22 ▼ HARMONIC FUND SERVICES 30.60 30.20 1% 21 ▼ 30.60 29.63 3% 24 24 - ALPS FUND SERVICES 30.85 29.20 6% 22 ▼ 30.85 28.10 10% 25 25 - STONE COAST FUND SERVICES 29.02 26.39 10% 29 ▲ 29.02 19.80 47% 26 28 ▲ DEUTSCHE BANK ALTERNATIVE FUND SERVICES 21.70 21.00 3% 26 - 21.70 21.00 3% 27 38 ▲ SUMI TRUST GLOBAL ASSET SERVICES 20.50 10.96 87% 37 ▲ 20.50 10.96 87% 28 29 ▲ SGSS 3 20.30 20.30 0% 28 - 20.30 20.30 0% 29 30 ▲ ORANGEFIELD COLUMBUS 19.50 19.00 3% 35 ▲ 19.50 12.90 51%

FOOTNOTES 1. Aua as of 31 October 2014 has been Citi’s decision to sell its hedge fund business and said new launches seen by the firm are not particularly 2. BNP AuA boosted buy acquisition of the firm says it is unable to offer updated figures for assets large. The firm has boosted its single hedge fund AuA by Credit Suisse admin ahead of any potential acquisition of the unit. 2% to $456bn over the last six months. 3. AuA as at October 2013 4. Maitland AuA boosted by acquisition of The last six months has seen the completion of BNP “New launches are happening all of the time and the Phoenix Fund Services Paribas’ acquisition of Credit Suisse’s admin unit while larger, more material mandates are transfers from other 5. Data at least one year old private equity giant Carlyle Group acquired a majority admins. 6. AuA as at end of April 2014 stake in Conifer. UBS is also understood to have put its “Clients are demanding real-time access to data which admin up for sale. is a key driver as funds build data warehouses internally to BNP’s acquisition of Credit Suisse has moved it up six support various data-intensive initiatives,” he says. places in the rankings with a combined AuM of $118bn Product complexity is an important area of focus for and is made up of $49.5bn BNP assets and $68.5bn from admins as areas such as the credit space and hybrid fund Credit Suisse. The deal completed last month and was first structures continue to evolve. announced in the first quarter of last year. Greaves adds: “As an admin you have to do more now. Other deals include Maitland’s purchase of Phoenix You are charging the same but doing more work for that Fund Services as part of its first foray into UK fund admin- and admins have to evolve and create stability and scale.” istration as well as Apex Fund Services taking over Pinna- Citco Fund Services’ global director William Keunen cle Fund Administration. says: “We have seen flat to negative capital flows, presum- Mergers, exits and acquisitions, alongside the con- ably on the back of some relatively mediocre performance tinued lull of activity in the launch space has meant that results in 2014, plus the volatile market environment.” the driver for asset growth at admin firms is mainly com- “However, these conditions tend to be cyclical, in par- ing from transferred business from competitors as well ticular as performance has been good so far this year. Aside as product development like the launch of retail vehicles from that, the launch flow has been relatively steady, if un- such as Ucits. spectacular. But the conversion pipeline remains a healthy SS&C GlobeOp managing director Eamonn Greaves contributor, so we are pleased with that.

HFMWEEK.COM 19 FEATURE HFMWEEK AUA SURVEY

6-MONTH 12-MONTH GROWTH GROWTH OCT 14 POSITION MOVED UP/DOWN APR 14 POSITIONMOVED UP/DOWN Apr 15 Oct 14 Oct 14 - Apr 15 Apr 14 Apr 14 - AuA AuA Apr 15 AuA AuA Apr 15 ($bn) ($bn) growth (%) ($bn) ($bn) growth (%)

30 34 ▲ CONIFER ASSET SOLUTIONS 19.10 13.40 43% 34 ▲ 19.10 13.10 46% 31 33 ▲ NOTTINGHAM INVESTMENT ADMINISTRATION 18.20 13.70 33% 32 ▲ 18.20 13.70 33% 32 32 - EQUINOXE ALTERNATIVE INVESTMENT SERVICES 18.00 15.61 15% 33 ▲ 18.00 13.57 33% 33 31 ▼ KAUFMAN ROSSIN FUND SERVICES 17.00 17.20 -1% 30 ▼ 17.00 17.20 -1% 34 27 ▼ CUSTOM HOUSE GLOBAL FUND SERVICES 16.97 21.89 -22% 24 ▼ 16.97 26.31 -35% 35 35 - MAITLAND 4 14.31 11.61 23% 31 ▼ 14.31 13.83 3% 36 36 - CAYMAN NATIONAL 11.15 11.35 -2% 36 - 11.15 11.45 -3% 37 39 ▲ SGGG FUND SERVICES 11.10 10.54 5% 40 ▲ 11.10 8.57 n/a 38 37 ▼ UMB FUND SERVICES (PREVIOUSLY JD CLARK & CO) 11.06 11.19 -1% 39 ▲ 11.06 9.56 16% 39 40 ▲ OPUS FUND SERVICES 9.70 10.10 -4% 38 ▼ 9.70 9.70 0% 40 45 ▲ WOODFIELD FUND ADMINISTRATION 9.20 6.00 53% 46 ▲ 9.20 5.30 74% 41 41 - CAPITA 8.50 7.60 12% 43 ▲ 8.50 6.80 25% 42 44 ▲ INVESTMENT DATA SERVICES GROUP (IDS) 7.35 6.65 11% 45 ▲ 7.35 5.95 24% 43 42 ▼ LICCAR & CO. 7.22 7.21 0% 41 ▼ 7.22 7.89 -8% 44 43 ▼ EUROPEAN FUND ADMINISTRATION 7.10 7.10 0% 44 - 7.10 6.40 11% 45 47 ▲ IKONIC (PREVIOUSLY ISIS FUND SERVICES) 6.32 4.53 40% 47 ▲ 6.32 4.41 43% 46 46 - TRIDENT FUND SERVICES 5.43 5.61 -3% 42 ▼ 5.43 7.41 -27% 47 50 ▲ CIRCLE PARTNERS 4.60 3.60 28% 49 ▲ 4.60 3.90 18% 48 48 - TRINITY FUND ADMINISTRATION 4.50 4.10 9.8% 49 - 4.50 3.90 15.4% 49 49 - INTERTRUST 5 3.74 3.74 0% 50 ▼ 3.74 3.74 0% 50 57 ▲ ODB FUND SERVICES 3.26 1.24 163% 56 ▲ 3.26 1.31 149% 51 52 ▲ BANQUE PRIVEE E. DE ROTHSCHILD 3.09 3.09 0% 51 - 3.09 3.06 1% 52 51 ▼ VALETTA FUND SERVICES 2.86 3.32 n/a n/a - 2.86 n/a n/a 53 54 ▲ ATLAS FUND SERVICES 2.13 2.06 4% 53 - 2.13 2.02 6% 54 55 ▲ GRASSI & CO 6 1.84 1.84 0% 54 - 1.84 1.66 11% 55 58 ▲ GRANT THORNTON FUND ADMINISTRATION LIMITED 6 1.16 1.16 0% 57 ▲ 1.16 1.16 0% 56 56 - IFINA 1.00 1.30 -23% 56 - 1.00 1.31 -24% 57 59 ▲ G&S 6 0.45 0.45 0% 58 ▲ 0.45 0.71 -37%

Keunen says Citco is seeing huge interest in hybrid However, some of the medium- to smaller-sized players models from hedge funds, private equity and real estate say there are plenty of opportunities for them to service funds that are seeking to add fund structures. some funds who are not part of larger admins’ plans and He adds: “They are looking to give themselves more those who want a more personal level of service. scope and flexibility in the way they invest and how they Maitland’s head of hedge fund operations Ben Per- manage liquidity. That is really the most interesting feature shick says: “We see opportunity in North America in the for us in terms of fresh demand for our products and ser- $100m-$500m fund space. The largest administrators con- vices.” tinue to under-service this segment and Maitland is an at- BNY’s global head of sales for asset servicing and al- tractive option for funds of that size.” ternative investment services, Marina Lewin, says hedge He adds that there are also other opportunities for funds are increasingly looking to admins to perform a smaller admins in different international jurisdictions wider range of functions as regulation hits other service where recent regulatory and tax changes have taken place. providers. “South Africa recently passed regulations that will al- “We have continued to enhance our Alternative Prime low hedge fund managers to market hedge funds to retail Custody offering by integrating capabilities that allow our investors. Maitland’s platform is perfectly positioned for clients to self-fund their own liquidity needs through di- this. Also, a change in Brazilian tax law has been the cata- rect lending and repo/reverse repo processing,” she says. lyst for Brazilians to start creating and investing in struc- “We also continue to respond to our clients’ needs for tures outside of the country. We see huge opportunities in an integrated platform by offering single-portal access for Cayman and Luxembourg.” administration, custody, collateral management, securities The continuing popularity of liquid alternatives is an- lending, capital markets and a host of other applications. other driver for admins with many citing growth in the We have seen substantial growth from clients and pros- space. The ability to be able to provide services to retail pects in reaction to liquidity rules imposed on their prime vehicles and traditional alternative funds has played a part brokers.” in consolidation within the industry.

20 HFMWEEK.COM DISTRIBUTION OF ASSETS ACROSS THE LIST

74.6% 15.9% 5.3% 2.6% 1.3% 0.3%

1-10 11-20 21-30 31-40 41-50 51-59

THE TEN LARGEST ADMINISTRATORS RANKED BY % GROWTH

161 +C82 +C 63 +C 34 +C 0+35 +C 26 +C 27 +C 28 +C 0+1009 +C 0+10010 +C 16% 8% 6% 3% 3% 2% 2% 2% 0% 0% HedgeServ Northern Trust Morgan Stanley State Street Citco Fund Bank of New SS&C GlobeOp SEI Citi Hedge RBC Investor Fund Services (IFS) Services York Mellon Fund Services1 & Treasury Services

THE BIGGEST RISERS ON THE LIST BY % GROWTH

631 +37C312 +69C 873 +C 534 +C 435 +C 406 +C 397 +C 338 +C 289 +C 1610 +C 163% 131% 87% 53% 43% 40% 39% 33% 28% 16% ODB Fund BNP Paribas SuMi Trust Woodfield Fund Conifer Asset IKONIC Apex Fund Nottingham Circle Partners HedgeServ Services Securities Global Asset Administration Solutions (Previously Isis Services Investment Services2 Services Fund Services) Administration

BNP Paribas’ head of asset and fund services and ex- Hedgeserv remains one of the largest independent ad- ecutive committee member Philippe Ricard says this was ministrators in the industry and sits in eighth place, having a driver for its deal to acquire Credit Suisse’s admin busi- increased AuA by 16% since October last year. ness. Chief marketing officer Leo LaForce says: “Our growth- He states: “The deal between BNP and Credit Suisse drivers continue to be referrals from satisfied clients and creates an offering across all asset classes and combines transitions of established managers. Both cite the value- Credit Suisse’s strength in the hedge fund space with add of our co-sourced technology model as an effective BNP’s extensive offering across for long-only managers as complement for their businesses. A real-time, shared plat- the two spaces become more closely aligned.” form helps us deliver responsive service, while simultane- SuMi Trust moved up the most places in the study ously providing our clients with immediate access to their having boosted assets by a huge 87% during the last 12 portfolio, investor, and tax data, without sacrificing over- months taking total assets to $20.50bn at the end of April. sight or controls.”  Consultant to SuMi Trust Global Asset Services Charles Bathurst says being able to offer administration services to hedge funds without forceful cross-selling is appealing for a number of managers. “We don’t have conflicts of interest in the group as peo- RATIONALE ple view our admin services as a standalone entity and not “AuA figures are carefully compiled using data supplied by one which dictates other relationships that managers can individual administration companies. Each reporting body is have in the market place.” required to strip out leverage, private equity and property He agrees that the growth in liquid alternatives and in- numbers to give an accurate picture of the current size creased fund movement between administrators are the of the hedge fund universe. Figures are rounded to two largest source of new admin assets. decimal places, whereas percentage growth expresses the “We have had strong growth on the Ucits platforms we full six-month figure.” service and we have seen assets coming into those as well. “We have a very healthy pipeline and see ourselves con- tinuing to grow at the same rate. The majority of business IN THE NEXT ISSUE is coming from transitions of hedge funds between pro- Find out who tops the funds of hedge funds list in the viders at a time when existing funds are seeking a higher- second part of HFMWeek's AuA survey in issue 383 quality service and where there are fewer new launches.”

HFMWEEK.COM 21 HFM event highlights DATE EVENT LOCATION Nov European CTA Service Awards London, UK Nov European CTA Performance Awards London, UK Nov San Francisco Operational Leaders Summit San Francisco, US Dec West Coast Liquid Alternatives Summit San Francisco, US 2016 Feb HFM Asia Operational Leaders Summit Asia Feb European Hedge Fund Technology Leaders Summit UK Feb Australia Hedge Fund Operational Leaders Summit Sydney, Australia Feb Australia Allocator Intelligence Summit Sydney, Australia Feb Ucits Summit US Feb European Allocator Intelligence Summit UK Feb HFM US Hedge Fund Technology Awards US Feb Alternative Credit Services Awards US Feb Alternative Credit Performance Awards US Feb CTA US Performance Awards US Feb CTA US Services Awards US Mar Singapore Allocator Intelligence Summit Singapore Apr European Hedge Fund Services Awards London, UK Apr European Hedge Fund Performance Awards London, UK May US Allocator Intelligence Summit US Jun Dallas Hedge Fund Operational Leaders Summit Dallas, US Jun US Hedge Fund Operational Leaders Summit US Sep European Hedge Fund Operational Leaders Summit UK Sep European Hedge Fund Legal Summit UK Sep Asia Hedge Fund Performance Awards Hong Kong Sep Asia Hedge Fund Services Awards Hong Kong Sep European Allocator Intelligence Summit London, UK Oct Chicago COO Summit Chicago, US Oct US Hedge Fund Performance Awards New York,US Oct US Hedge Fund Services Awards New York, US Nov US Hedge Fund Technology Leaders Summit US Nov US Fund of Hedge Funds Leaders Summit US Nov US Allocator Intelligence Summit US Nov European Hedge Fund Technology Awards London, UK Nov European Alternative Credit Service Provider Awards London, UK Nov European Alternative Credit Performance Awards London, UK Nov European CTA Service Provider Awards London, UK Nov European CTA Performance Awards London, UK Nov San Francisco Hedge Fund Operational Leaders Summit San Francisco, US Dec West Coast Liquid Alternatives Summit San Francisco, US

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