Money managers under the microscope
Changing the model
Man Investments has invested another $50 mln into a start-up hedge fund, showing that, for those prepared to take the perceived risks, there may be good opportunities to back talented managers at the moment.
The firm’s RMF Global Emerging Managers seeding fund has backed Hong Kong-based Minerva Macro fund, run by ex-Fortress manager Stanley Ku, having last month put $50 mln with 5:15 Capital Management’s flagship fund.
Some hedge fund seeders believe that tougher fundraising conditions for boutiques, coupled with reduced competition as some banks have cut back their seeding, means those with the cash can get great deals with talented managers starting their own firms now.
However, seeding isn’t what it was in the ‘old days’ of the hedge fund industry (i.e. 10 years ago).
Now, according to Hans Hurschler, head of Man Investments’ Hedge Fund Ventures, it’s more like loaning money to a start-up than making a private equity-style investment.
“The seeding world has developed a lot over the last two-to-three years. There must be quite a bit of partnership,” he told me.
“You give larger chunks of money. A manager doesn’t want people who in 15 or 20 years are taking money from you. Today’s deals are limited in time. They’re not like private equity deals, they’re like a loan.”