SPECIAL REPORT MANAGER 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 to our membership of hedge fund professionals. 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 our members. PAUL For example, in this issue we highlight and analyse the new MCMILLAN and upcoming launches getting the biggest investors and cap intro heads excited. The launch section of our magazine and [email protected] website is one of our most popular features as managers look @mcmillan_paul to stay abreast of what their peers and competitors 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. Basel III and other banking rules are having a huge knock on effect when it comes to certain hedge fund strategies and our team has been keeping a close eye on proceedings. In this special report we assess how managers have been trying to mitigate the impact of increasing clearing costs and there is plenty more analysis on our website. We hope you enjoy this special report and continue to engage with the HFM team. n 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.