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A FORMER PORTFOLIO manager at Hutchin Hill is starting a new hedge fund in London named Decca Capital and has hired seasoned opera-tions specialist Doug Shaw as COO.
HFMWeek has learned that Shahraab Ahmad, who spent five years managing a liquid credit strategy for the $2.5bn firm, plans to start trading with his new firm near the start of next year.
Ahmad, who left Hutchin Hill in June 2013, is work-ing with Shaw, an eight-year
BlackRock executive who rose to prominence defending the UK’s hedge fund sector fol-lowing the financial crisis in an appearance before the Treasury Select Committee.
The pair met through an inves-tor who was allocated to both Hutchin Hill and BlackRock. Prior to spells there as head of alternatives, fundamental equi-ty COO and head of charities, Shaw worked for Chris Hohn’s TCI and Gartmore Investment Management.
Decca’s senior team is com-pleted by Razvan Frumosu, who will lead business devel-opment. He has previously worked in various roles for Société Générale, JP Morgan and Bank of America.
Ahmad has relocated
Shahraab Ahmad building new London-based firm with former BlackRock COO BY WILL WAINEWRIGHT
03
COMMENT MA K E S U R E Y O U A R E U P TO D AT E O N F ATC A 14
Ex-Hutchin Hill manager launches Decca Capital
HFMWEEK MEETS THE SEC AN EXCLUSIVE INTERVIEW WITH TOP SEC EXAMINERS ON THE MAIN REGULATORY ISSUES FOR HEDGE FUND MANAGERS
FEATURE 19
The long and the short of it ISSUE 356 9 October 2014
NEWS 10
13-YEAR MORGAN STANLEY VET LEADS LONDON LAUNCHSteven Cress wins Trium Capital’s biggest seed ticket so far
NEWS 03
PROTEST IMPACT UNSETTLES HONG KONG HEDGE FUNDSProfessionals have “wait and see” attitude, says one COO
NEWS 05
MOORE CAPITAL HIRES SAC’S FORMER LONDON COUNSELFamida Daniels joins ex-colleagues recruited earlier this year
WHERE BANKS FEAR TO TREAD
FEATURE 16
HFMWeek investigates how managers are filling a hole left by the bank pull-back from traditional lending
© UBS 2014. All rights reserved.
Whether you have your own European management company or need the services of one.
If you want a full depositary solution or just a ‘lite’ solution.
Regardless of how many EU countries you do business in or how many prime brokers you use.
developing your customized AIFMD reporting and passporting solutions.
We look forward to partnering with you.
Contact us at [email protected] or go to www.ubs.com/fundservices
Does your fund services partner have the AIFMD solution you need?
Global Custodian Hedge Fund Administration Survey 2014
ROLL OF HONOR
9 - 1 5 O C T 2 0 14
NEWS
H F M W E E K . CO M 3
If you have a news story for HFMWeek, please email: [email protected]
HEDGE FUND WORKERS IN Hong Kong have expressed unease but don’t expect recent protests and unrest in the region to have a seriously adverse impact on its status as a financial hub.
“We have a wait and see atti-tude,” said Elaine Davis, COO at Nine Masts Capital, in reference to recent pro-democracy protests which have divided opinion among sources canvassed by HFMWeek.
“On the first day of the demon-stration we took the precaution of preparing our business continuity plan in [case] the protest escalated to a level that prevented staff from getting to the office safely,” said Raymond Kwok, COO at Sparx Asia Investment Advisors, adding that there hasn’t been any disrup-tion to their normal working day since the protest started.
Another Hong Kong-based
COO said the unrest, which saw protestors blockade squares and main roads in the city centre, was unlikely to damage its status as China’s main financial hub.
“Shanghai and Beijing are not in the right state yet. They do not have the transparency that Hong Kong has,” said the person, speak-ing on condition of anonymity. “But I think the beneficiary from any trouble will be Singapore.”
Singapore is Hong Kong’s main rival for pre-eminence as Asia’s main financial hub and sources said increased turbulence in Hong Kong could see more financial workers move to the city-state.
However, a prime broker in the region told HFMWeek he was not aware of hedge fund managers planning to relocate because of the unrest, nor had any planned launches or investments been
delayed to his knowledge.“There are some drivers that
make Singapore more popular than Hong Kong, such as the life-style there and the environment, but I don’t think this movement will change things. I don’t see an Arab Spring-type situation occur-ring – it will only be short-term,” said Alper Ince, a managing direc-tor at Paamco.
The protests were sparked by China’s insistence on vetting can-didates before they were cleared to stand in Hong Kong elections in 2017. However, the number of protestors dropped over the weekend.
[email protected]@hfmweek.com
Atticus Capital 5Balyasny Asset Management 6Bell Rock Capital Management 6BlackRock 1Bremner Capital 5Broadmeadow Capital 9Caxton Associates 6Columbia Mgmt Investment Advisors 7Cress Capital Management 10Decca Capital 1EIM 5Gartmore Investment Management 1Good Harbor Financial 9Gottex 8Graham Capital 8, 10Hitchwood Capital 8Hutchin Hill 1,3Investcorp 7Kings Peak Asset Management 11Lodestar Capital Group 5Meditor Capital 6Metacapital Management 11Moore Capital Management 5, 6Nine Masts Capital 3Pershing Square Capital Management 11QSI 10Rasini Fairway Capital 6Sparx Asia Investment Advisors 3Stenham Asset Management 8Signet 8TCI 1Winton Capital Management 8York Capital Management 6
FUND MANAGER INDEX
I N T H I S
I SSUE
from New York to London to build Decca and the firm is talk-ing to potential investors and providers ahead of its launch.
He cut his teeth as a mon-ey manager working for JP Morgan’s credit team before working for Sailfish Capital Partners. He joined Hutchin Hill, which was founded by for-mer SAC Capital Advisors man-ager Neil Chriss in 2007.
Details on fundraising could not be obtained.
Protest impact unsettles Hong Kong hedge fundsProfessionals have “wait and see” attitude, says one COO
HONG KONG
CONTINUED FROM PAGE 1
DECURA GROUP AND UBS faced off in court last week in the latest stage of their legal tussle over a business deal the two parties agreed in 2012.
UBS stands accused by Decura, which has brought the action, of reneging on its agreement to provide clients for its managed account and algorithmic trading businesses.
The latest stage in the contest centred on what evidence would be permissible in court, after UBS filed an application that certain documents be regarded as irrelevant and not form part of the trial, which is expected to start later this year or early in 2015.
The firms declined to [email protected]
DECURA AND UBS BATTLE IN COURT
Unlike the US, European launch activity has been pretty static this year with uncertainty around the
introduction of the AIFMD casting a shadow across the region.
But with the directive now in-force, a decent number of managers we’ve spoken to have been readying launches for the start of next year to ensure they will have full-year trad-ing histories.
We report this week on one such launch, Decca Capital, which will see former Hutchin Hill portfolio man-ager Shahraab Ahmad move from New York to London to lead the firm and ex-Blackrock executive Doug Shaw take on the COO role (p.1).
Shaw will be well known to many readers for his strong defence of the hedge fund sector at a UK Parliamentary hearing following the 2008 financial crisis.
It is a role he may need to reprise if the Labour Party gains power at next year’s general election given its stated objective of hammering the hedge fund sector through new poli-cies such as scrapping intermediary
tax relief from stamp duty. One obvious line of defence is the
role hedge funds have taken on in lending to businesses that the tradi-tional banks can no longer service due to new regulatory constraints.
In this issue we take a closer look at some of the opportunities hedge funds are eyeing as banks move away from anything but “cookie cutter” lending (p.16-17).
Asset-backed finance, P2P lend-ing, bridging loans and niche areas such as invoice factoring were all highlighted as popular options in this week’s reader survey (p.5).
HFMWeek was also at the SEC’s offices in Washington last week to interview senior staff at the Office of Compliance Inspections and Examinations about their current outlook for the sector (p.19).
Although the pair were tight-lipped around current investigations into cyber security and liquid alter-natives (for now), they offered some useful guidance on the type of things the regulator is looking out for as well as its top supervisory priori-ties.
EDITOR’S VIEWBY PAUL McMILLAN
@mcmillan_paul
P A G E
I N S I G H T
9 -1 5 O C T 2 0 144 H F M W E E K . CO M
SOUTH AFRICA HEDGE FUNDSSouth Africa-based hedge funds managed assets of more than R53.6bn ($4.8bn) as of 30 June, a 27% increase on the R42.2bn ($3.7bn) managed the previous year, according to research from Novare Investments. The firm attributes the rise to a combination of strong positive performance, especially in the equity space, and inflows into the sector. Net inflows for the 12 months ending June 2014 were R4bn ($354m) of which R654m ($57.9m) was allocated to new launches. Total outflows amounted to R5.1bn ($451m) with a further R1.1bn ($97m) of capital returned to investors by funds that closed down. Over half of assets, 57%, were managed by firms with hedge fund assets exceeding R2bn ($177.1m), accounting for 56.9% of the entire industry but down from 68% the previous year as firms with assets between R1bn ($88.5m) and R2bn ($177.1m) increased their share from 13% to 29%.
MAR
KET
MON
ITOR
BEN
CHM
ARKS
HIG
HS&
LOW
SINDEX PERFORMANCE 8 Sep - 6 Oct 2014 (%)
FTSE 100 NASDAQ S&P500 HFR INDEX
YTD RETURNS SOURCE: HSBC ALTERNATIVE INVESTMENT GROUP
HEDGE FUNDS
Pharo Gaia Fund
32.17%Merchant Commodity Fund
32.14%Mellon Offshore Alpha Access Fund
-15.81%CC Asia Absolute Return Fund
-21.25%
HIGH
LOW-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
06/1002/1030/0926/0924/0922/0918/0916/0912/0910/0908/09
R 0
R 10,000
Jun 2002 Jun 2003 Jun 2004 Jun 2005 Jun 2006 Jun 2007 Jun 2008 Jun 2009 Jun 2010 Jun 2011 Jun 2012 Jun 2013 Jun 2014
R 1,138 R 2,125R 3,286
R 6,068
R 15,361
R 25,895
R 30,274 R 29,434R 32,096 R 31,433
R 33,595
R 42,204
R53,635
R 20,000
R 30,000
R 40,000
R 50,000
R 60,000
R 0
R 10,000
R 20,000
R 30,000
R 40,000
R 50,000
R 60,000
Jun'08 Jun'09 Jun'10 Jun'11 Jun'12 Jun'13 Jun'14
10 largest funds’ assets Total assets
0%
10%
20%
30%
40%
50%
60%
70%
80%
R100-R200m
‹R100m R500 - R1bn
R1bn-R2bn
>R2bn
Jun'12 Jun'13 Jun'14
R200-R500m
TEN LARGEST HEDGE FUNDS HEDGE FUND ASSETS BY FIRM SIZE
ASSETS UNDER MANAGEMENT
Firm size
H F M W E E K . CO M 5
Bremner Capital adds COO as assets climbHEDGE FUND ACCOUNTING veteran Dominic Eccles has joined London-based Bremner Capital, replacing former COO Joanne Francis, who left the firm in July.
Eccles moved to Bremner Capital in September after working in operations at London-based man-ager Davide Leone & Partners since January 2012.
Bremner Capital manages $130m in its Master Fund and has recorded performance of 15% since its launch in September 2013.
HFMWeek had previously report-ed that Bremner was thought to have launched with less than $50m under management, with a significant
chunk being put up by the founders.It is led by Dr Christopher Bremner,
previously one of three portfolio managers at the once-$20bn activ-ist firm Atticus Capital and Tancredi Marchiolo, previously of Arpad Busson’s EIM, the Swiss FoHF group.
Eccles previously worked in Dublin as a hedge fund accounting director at IFS/State Street AIS for over 10 years.
Francis left Bremner Capital on 31 July, according to the FSA register, moving to a head of operations role at family office LK Advisers.
Bremner also recently added Brian Way as head of trading and Sam Kelly as investment analyst. Way has held positions at Atticus Capital, Oppenheimer and the Bermuda Central Bank.
9 - 1 5 O C T 2 0 14
THE FORMER in-house counsel and compliance officer in the London office of SAC Global Investors has been hired by Moore Capital Management’s European division, HFMWeek has learned.
Famida Daniels has started in the London office of Louis Bacon’s hedge fund firm, joining a contingent of for-mer SAC colleagues recruited earlier this year.
She was added to Moore Europe Capital Management’s filing with the FCA as a partner on Friday.
Moore hired a nine-strong team of seven portfolio managers and two analysts from SAC in London at the start of this year, in the biggest collec-tive exit from Cohen’s firm as it closed its European base.
Daniels joined SAC in 2007 and
spent seven years at Cohen’s firm, until it closed its European headquarters in London following a series of insider trading scandals. The firm, which has converted to a fam-ily office mainly managing
Cohen’s fortune, has been renamed Point72 Asset Management.
Moore Capital, founded by Bacon in 1989, declined to comment on the hire. The New York-headquartered firm now runs around $11bn through its two main offerings, according to HSBC data.
The $4.6bn Global Investment fund is down -3.94% for the year through 18 September, while the $6.4bn Macro Managers fund is up 3.10%. The pair made 17.02% and 13.49% in 2013, respectively.
Moore Capital hires SAC’s former London counselFamida Daniels joins ex-colleagues recruited earlier this year
PEOPLE MOVES
SEPTEMBER 2014
HFRXHEDGE FUND INDEX(YTD 3 OCTOBER 2014)IN
DICE
S MERGER ARBITRAGE
0.76%EQUITY LONG/SHORT
1.23%GLOBAL MACRO
2.55%
HEDGE FUNDS
1.19% FUNDS OF HEDGE FUNDS*
2.62%
RELATIVE VALUE
-0.05%EQUITYSHORT BIAS*
-3.60%EVENT DRIVEN
1.47%
EMERGING MARKETS*
1.16%EQUITYMKT NTRL
2.64%MULTI STRATEGY*
2.40%
HFRI composite
* As of 31 August
$11bnAMOUNT MOORE
CAPITAL NOW RUNS THROUGH ITS TWO MAIN OFFERINGS
PEOPLE MOVES
WHERE BANKS FEAR TO TREAD
FEATURE P16
1 6 H F M W E E K . CO M
FEATURE BANKING
9 -1 5 O C T 2 0 14
STEVE CLARK, OMNI PARTNERS
BANKS PRESENTLY ARE ONLY INTERESTED IN
COOKIE-CUTTER DEALS. IF YOU FIT THEIR CRITERIA
THEN YOU CAN HAVE THE MONEY, BUT IF YOU
DON’T THEN THERE’S NO FURTHER DISCUSSION ”
HFMWeek takes a closer look at the way managers are filling a hole
left by the banks pulling back from traditional lending activities
BY JASMIN LEITNER
T he onslaught of regulation aimed at curb-
ing certain types of banking activity, such as
lending to firms with riskier credit profiles or
more unusual finance needs, has significantly
altered the global financial system. As banks face pressure to manage their
balance sheets more prudently, hedge funds are stepping
in to fill the void, with hedge fund giants Cheyne Capital,
DE Shaw and Marshall Wace among those showing an in-
terest in lending or loan-related strategies. WHAT ARE THE MAIN DRIVERS?Post-2008 regulation has restricted certain banking ac-
tivities that financial authorities believe could threaten
the viability of the financial system during another crisis,
highlights Jens Foehrenbach, credit strategy head at Man
Group’s FoHF arm FRM. “In the case of lending, this has been through the impo-
sition of higher capital requirements,” he adds.
Another driver has been stress in the European banking
system. “In 2009, European banks did not de-lever to the
same extent as those in the US and were then hit by credit
risk being induced into their supposedly safe and liquid
eurozone sovereign bond portfolios. They cut back lend-
ing, especially outside their home markets.“These developments have created opportunities for
funds to capture businesses that had historically been
dominated by banks,” Foehrenbach adds.Steve Clark, founder and head of risk at London-based
Omni Partners, agrees. “Five years ago we recognised a
simple opportunity to lend money into a space that was no
longer being catered for by the banks or other bank-fund-
ed providers,” he says, explaining the context in which he
seeded lending business Capital Bridging Finance Limited
(CBFL), now a wholly-owned subsidiary of Omni.
Omni then launched the $833m Secured Lending Fund
I, which uses investor capital to provide residential and
commercial financing, in February this year.Clark says investors are looking for ways to put money
into the real economy. “Previously, the only direct way in-
vestors could do this was through securitisation, which has
been badly discredited.“So there’s a tremendous opportunity for institutions
like ourselves to create a conduit for money from the end
suppliers of credit, such as pension funds and insurance
companies, directly into the real economy.” WHERE DO THE OPPORTUNITIES LIE?For New York-based private investment firm Shadow Tree
Capital, there are three big opportunities: specialty finance
company lending, asset-based lending and secured busi-
ness lending.“The gross returns we get from these areas is in the mid-
teens. They have been particularly affected by the pull-back
of bank capital, and usually the businesses involved gener-
ate margins that are sufficient to pay those types of rates,”
Henry Goodman, a principal at Shadow Tree, explains.
For Omni, the main focus so far has been short-term
lending in the UK property market, on both a commercial
and residential basis, which can yield between 12% and
15% annually in a fund.Clark says: “No-one would go to us if they could get
financing from a bank because we’re more expensive, but
we’re much more willing to work with clients.
“Banks presently are only interested in cookie-cutter
deals. If you fit their criteria then you can have the money
and have it quite cheaply, but if you don’t then there’s no
further discussion, they can’t do anything else for you.”
Clark adds that other opportunities, such as European-
wide real estate debt or asset finance, could also be of fu-
ture interest. Peer-to-peer (P2P) lending platforms, which match
lenders and borrowers across consumer credit, mortgages
and SME-lending, are also starting to garner the attention
of hedge funds and other alternative players.
Marshall Wace is currently deploying the £200m
($321m) it raised on the London Stock Exchange earlier
this year when it floated P2P Global Investments, a com-
pany set up to invest in P2P loans and platforms. “P2P
lending has the potential to transform consumer and
SME lending practices worldwide by disintermediating
the banks,” Ian Wace, CEO of Marshall Wace, commented
early this year. P2P lending has become popular with structured credit
WHERE BANKS FEAR TO TREAD
016_017_HFM356_DisruptionFeature.indd 16
LODESTAR APPOINTS COOPORTFOLIO MANAGER GURDON Mer-chant at San Francisco-headquartered Lodestar Capital Group has added COO duties to his role.
Merchant became COO and portfolio manager at the long/short equity hedge fund manager in September after working at the firm in various trad-ing roles since March 2008.
Prior to joining the firm, he held a variety of IT systems-related positions, including managing developer and quality assurance environments for the wealth management platform at Merrill Lynch’s development office.
He takes on the responsibilities from owner and president Scott Fenton who will focus on other aspects of the firm.
Lodestar declined to [email protected]
The impact hedge funds have made in areas vacated by banks following the fi nancial crisis is explored in this week’s issue (see page 16). Asset-backed fi nance has been affected most, according to readers answering this week’s survey question, while lending to small and medium-sized businesses has felt least impact.
READER SURVEY
AS BANKS HAVE PULLED BACK FROM CERTAIN ACTIVITIES, HEDGE FUNDS HAVE STEPPED IN – IN WHICH AREA HAVE THEY MADE THE BIGGEST IMPACT?
Asset-based finance 27.3%
Niche areas such as litigation finance or receivables factoring 18.2%
Peer-to-peer (P2P) lending 18.2%
Real estate bridging loans 18.2%
Lending to small and medium-sized businesses 9.1%
None 9.1%
PEOPLE MOVES
9 - 1 5 O C T 2 0 146 H F M W E E K . CO M
Raveneur Investment Group has hired Alexan-dra Zarrilli as director of business development. Zarrilli joined Mark Black’s fi rm on 15 September from $1.3bn Merchants’ Gate Capital.
EM specialist Finis-terre Capital has hired Christopher Buck as head of credit research. Formerly head of LatAm corporate credit research at Barclays, Buck joined the London-based fi rm on 29 September.
Quad Group has hired former COOs David Spring and David Horowitz from Clinton Group and Ban-yan Capital respectively. In the same role, Spring will oversee day-to-day opera-tions, while Horowitz will be a managing director.
Charles Hopkinson-Wool-ley is joining $2.2bn UK asset manager NewSmith as head of alternatives and products from Tyrus Capital.
Dexion Capital has hired Cheyne Capital’s interna-tional sales and distribution head Max Nardulli. In a similar role, Nardulli will be responsible for Dexion’s distribution strategy.
P EO P L EM O V E S
PEOPLE MOVES
PEOPLE MOVES
JP Morgan hires Rasini Fairway CIOJP MORGAN HAS hired former Rasini Fairway Capital CIO Karim Leguel as head of EMEA Client Strategy.
Leguel started in the newly created role with JP Morgan’s alternative asset management division last Monday, a spokesperson at the investment bank confirmed.
The industry veteran, who has worked at Rasini for over 15 years in various positions, will work along-side portfolio managers to provide “specialist” investment knowledge to clients.
He will also be responsible for ensuring clients’ investment needs are met across the platform, the spokesperson added.
Latterly at Rasini, Leguel was head of RF Capital, an alternative Ucits seeding platform and CIO for the London and Zurich-based firm’s alter-native investment solutions business.
Balyasny makes another European hireBALYASNY ASSET Management has hired equities specialist Torbjorn Andreassen to join its London office.
Andreassen joined the Chicago-headquartered firm from Bell Rock Capital Management on 30 September and will work as an equi-ty generalist portfolio manager, a spokesperson confirmed.
At Bell Rock, formerly known as De Putron Fund Management (DPFM), Andreassen was an equity portfolio manager for seven years.
Balyasny, founded by Dmitri Balyasny in 2001, has added sev-eral staff to its London office this year, including former OVS Capital partner Manuel Blanco and former Meditor Capital portfolio manager Paul Newton.
PEOPLE MOVESS P O N S O R E D BY
CAXTON ASSOCIATES HAS hired BNP Paribas’s former head of emerging markets proprietary trad-ing, who becomes the latest recruit to the $8bn firm’s London base.
Jean-Luc Alexandre was added to Caxton’s filing with the FCA on Wednesday. He becomes the 35th Caxton employee currently autho-rised by the UK regulator.
He worked for BNP Paribas between 2007 and 2014, eventually leading the French bank’s emerging markets proprietary trading effort.
Details on his new role could not be obtained and Caxton declined to comment, as did BNP Paribas.
Alexandre is the latest hire by US hedge funds based in London, follow-ing a wave of recruitment this year by firms such as Moore Capital, York Capital Management and Balyasny Asset Management, which has just hired a new manager from Bell Rock Capital Management (see right).
Caxton was started in 1983 by Bruce Kovner, who relinquished day-to-day control in 2011 by appointing manager Andrew Law as chairman and CEO.
The firm hit the headlines last week after it emerged that Goldman Sachs had bought a 10% stake via its Petershill II fund.
PEOPLE MOVES
Emerging markets pro from BNP Paribas joins CaxtonAlexandre becomes latest recruit to $8bn US firm’s London office
AUGUST 2014
ABSOLUTE RETURN INDICESSOURCE: Newedge Prime Brokerage Group
AUG2014 EST-0.67%YTD 2014 EST-2.25%
VOL AT I L I T Y TR AD ING INDEX
SUB-INDICES
EQUITY STRATEGIES
AUG 14 2 .05%
Y TD 4.80%
TRADING STRATEGIES
AUG 14 0. 59%
Y TD 3.86%
AUG2014 EST0.82%YTD 2014 EST4.01%
COMMODIT Y TR AD ING INDEX QUANTITATIVE
AUG 14 3.89%
Y TD 6. 56%
DISCRETIONARY
AUG 14 -0. 70%
Y TD -3. 37%
AUG2014 EST1.16%YTD 2014 EST0.23%
MACROTR AD ING INDEX
SUB-INDICESIN
DIC
ES
Cloud-based technology is increasing in importance, subscribers at last week’s US breakfast briefi ng were told. Panellists Robert O’Boyle, of event sponsor Liquid Holdings Group, David Rhudy, Peter Lupoff and Chris DiNigris pointed out that investors were increasing their scrutiny of a fi rm’s cloud provider, and that having a recognised brand name was as important as having recognised audit, legal and admin fi rms on board.
THE WEEK
H F M W E E K . CO M 79 - 1 5 O C T 2 0 14
Brevan Howard’s flagship macro fund saw its highest monthly gain in three years, boosted by the rising US dollar. The fund returned 4.4% in September, according to an inves-tor letter cited by Reuters, beating the average 1.5% gain by peers over the same period. The positive performance helped reverse the losses incurred by the fund in seven of the last nine months.
ALTERNATIVES MANAGER Investcorp is planning to expand its business with the launch of an alter-native beta-focused offering in the next year.
In what will be the “fourth pillar” of Investcorp’s $5bn hedge fund division, investors will have access to bench-marking tools for their existing hedge fund exposures, and will be able to allocate to portfolios of “risk factors” as an alternative.
Investors will be able to access risk factors such as relative value, dis-persion, correlation, volatility and momentum through a portfolio of rep-licator products selected by Investcorp, Lionel Erdely, head of hedge funds, told HFMWeek.
“These risk factors can come through index replication, use of swaps, options and other derivatives, as well as other products provided by traditional asset managers, investment banks and other firms in the market,” Erdely said.
“We will do due diligence on the solutions available and, using the expertise we have built in understand-ing these risk factors, will choose the best products to implement our views on each factor.”
Erdely declined to provide further details on the range of products, or the fees that will be charged, as they were still being finalised.
Investcorp has made several hires as part of its preparations for the project, including the addition of former Goldman Sachs VP and port-folio manager Yi Lu from Columbia Management Investment Advisors.
Lu has been charged with leading Investcorp’s quantitative research on performance and risk factors on hedge fund strategies, and to continue to deepen its portfolio analytics and opti-misation techniques.
The firm also announced last month that Rebecca Hellerstein, pre-viously a strategist at JP Morgan, had joined to work in a newly created role as cross-asset strategist.
Erdely added that the fourth pillar would be complementary to the firm’s existing hedge fund offerings, which include customised FoHF portfolios, a single manager seeding platform and a portfolio of special opportunities and co-investments.
Look out for HFMWeek’s profile of Lionel Erdely in the next few weeks.
Investcorp plans alternative beta “fourth pillar”Clients will get access to hedge fund risk factors with lower fees
L AUNCH
SWEET CHARITY
FEATURE P22
WEE
K I
N N
UM
BER
S
Pershing Square to launch listed fund on 13 October
Brevan Howard’s main macro fund has best month in three
years
Months it took for Spain to pub-lish a draft AIFMD decree after the directive became EU law
Bremner Capital sees steady asset-rise since September
2013 launch
San Diego’s pension board votes to maintain outsourced CIO contract with Lee Partridge
$3bn 4.4% $130m 5-4 14
THE WEEK
2 2 H F M W E E K . CO M
URE PHILANTHROPY
9 -1 5 O C T 2 0 14
ROB DAVIS, MCALINDEN RESEARCH PARTNERS
[PREVENTING CHILD ABUSE] WAS A CAUSE I COULD BE REALLY ENTHUSIASTIC ABOUT AND IT WAS PARTICULARLY MEANINGFUL TO ME ”
HFMWeek takes a look at the hedge fund industry ’s various philanthropic endeavours, and finds out what motivates managers to support certain charitiesBY ELANA MARGULIES
W ith giving season just around the cor-ner, hedge fund-backed charities and professional associations around the globe are continuing to build on the billions of dollars already raised col-lectively to fund initiatives that are close to their hearts. The Robin Hood Foundation, started by hedge fund luminary Paul Tudor Jones, has raised more than $1.95bn since its inception in 1988 to fight poverty in New York, raising $60m at its most recent annual gala in May.Hedge Funds Care (HFC) raised around $2m at this year’s New York Open Your Heart to the Children Ben-efit to prevent and treat child abuse, five times the amount raised at its first event in 1999, while 100 Women in Hedge Funds (100WHF) has raised over $33m since inception for charities focused on women’s and family health, educa-tion and mentoring, receiving $1.27m at last year’s annual New York Gala.Additionally, High Water Women (HWW) has raised
an average of $500,000 annually over the last few years to promote financial literacy and microfinance, and A Leg To Stand On’s (ALTSO) Hedge Fund Rocktober-fest in New York and Chicago last year raised approxi-mately $500,000 combined to provide children in devel-oping countries with prosthetic limbs and life-altering surgeries.A newer charity, Portfolios with Purpose (PwP), founded in 2011, hosts an annual stock selection compe-tition where hedge fund managers and other investment professionals compete on behalf of their favourite chari-ties. It has raised $474,100 since its inception, receiving the most money this year, $264,100, an increase from $185,000 in 2013 and $25,000 in 2012.
CHILDREN With the money raised from the New York Gala, along with galas and smaller events in other cities around the globe, HFC has given out 100 grants totalling more than $40m to non-profits that work to prevent and treat child abuse.
Rob Davis, managing director at McAlinden Research Partners, founded the organisation in the autumn of 1998, a pivotal period in the hedge fund industry as it dealt with the effects of Long Term Capital Manage-ment’s downfall. He says preventing child abuse was a cause he felt passionate about since his time working as a
SWEET CHARITY
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US pension funds including the State of Wisconsin Investment Board have been identified as potential buyers for the California Public Employees’ Retirement System’s $4bn hedge fund portfolio, according to reports. Performance Trust Asset Management (PTAM), a near-$1bn Chicago-based firm, has seen its newly-launched fixed income fund boosted by a $50m alloca-tion from an undisclosed institutional investor. The allocation increases assets at the PTAM Dynamic Fixed Income Fund to $85m. Alameda County Employ-ees’ Retirement Associa-tion’s (ACERA) investment committee has approved a $100m commitment to Lighthouse Investment Partners. The capital will be allocated to a low beta/high alpha absolute return fund run by the $8.2bn asset manager. The Bank of Singapore is building a new invest-ment and operational due diligence framework to allow its private bank clients to invest in hedge funds, according to reports. To date, the bank has focussed more on offering long-only investment products.
THE £3.29BN ($5.32BN) AVON Pension Fund has decided to main-tain its allocation to FoHFs instead of opting to hire single manager hedge funds, HFMWeek has learned.
The pension fund committee for the scheme, part of Bath and North East Somerset Council, approved a recommendation on Friday to main-tain its current target exposure of 5% to FoHFs, following a review.
JLT conducted the review, which began in February, to help Avon decide whether to “retain some or all of the current portfolio and/or select new FoHF manager(s), or go down a single multi-strategy or sin-gle strategy manager route”, papers seen by HFMWeek at the time stated.
The UK local authority scheme
has not yet decided how to imple-ment the recommendation to keep their FoHF exposure, according to assistant investment manager Matt Betts.
HFMWeek understands the scheme will decide at its December meeting whether to maintain the existing FoHF mandates it has with Gottex, Signet and Stenham or whether to hire new managers.
The three firms take up 4.9% of the portfolio, managing £57m ($92m), £66m ($105m) and £38m ($61m) respectively.
The decision to maintain FoHFs, as opposed to hiring single managers, was made due to the “diversification” FoHFs can provide, and because of the level of expertise and resources
required to select single managers, Betts added.
FoHF performance is positive YTD, according to Hedge Fund Research, with the HFRI Fund Weighted Composite Index up 3.84% despite seeing declines during four months of the year.
ALLOC AT ION
If you would like to comment on any investor-related news story or development, contact Alex Cardno, HFMWeek investment editor, at [email protected]
SEARCH LOG CONTINUES ON P12
Colorado pension signs new $42m ticketA $4.1BN COLORADO pension plan has added to its hedge fund exposure, with a $42m investment in Hitchwood Capital.
The Fire & Police Pension Association of Colorado (FPPAC) hired long/short equity fund Hitchwood Capital following a September board meeting.
Hitchwood Capital launched in June and marked the return of James Crichton to the hedge fund industry following the closure of former firm Scout Capital earlier this year.
The retirement system’s CIO, Scott Simon, told HFMWeek the board supported “continued imple-mentation plans”, but could not be more specific on when further hedge fund investments will hap-pen.
Hitchwood’s allocation follows a period of significant allocations to hedge funds by FPPAC.
In July this year, the pension fund invested $200m in Winton Capital Management to run a long-only global equity strategy.
That hire followed a $40m invest-ment in Graham Capital in April, which came just months after FPPAC made its debut spend in the managed futures space by split-ting $80m between Winton and BlueCrest’s BlueTrend.
AQR were also hired by FPPAC in December last year with a $100m ticket split equally between AQR Delta and AQR SPF. That followed a $45m allocation to MKP Capital in October 2013.
FPPAC, which is advised by Albourne, has 10% of investments tied up in its absolute return port-folio.
ALLOC AT ION
Salient’s Lee Partridge survives San Diego voteSAN DIEGO COUNTY’S pension board has voted by five to four to con-tinue a controversial outsourced CIO contract with Salient Partners and Lee Partridge.
SDCERA began a five-year contract with $23bn Houston-based asset man-ager Salient on 1 October, but certain board members criticised Salient’s fees and its use of leverage to generate returns. Salient has been paid $17.5m in fees since it first took on the portfo-lio in September 2009.
The new contract’s fee structure was 10bps, but one SDCERA trustee esti-mated this would push fees to more than $50m over the contract’s dura-tion. It was proposed the contract be cancelled, but the motion failed fol-lowing a three-hour board debate.
STR ATEGY
UK’s Avon pension decides to stick with FoHFs£3.29bn fund will maintain its current target exposure of 5%
PERMAL GROUP
TOTAL AUM $22.3bn ACTIVITY Eyeing opportunities in event-driven and macro strategies
WILTSHIRE COUNTY COUNCIL TOTAL AUM $2.76bn CONSULTANT MercerACTIVITY Started searching for multi-asset credit and absolute return fixed income managers
OKLAHOMA FIREFIGHTERS’ PENSION & RETIREMENT SYSTEM TOTAL AUM Not disclosedCONSULTANT Bogdahn GroupACTIVITY Seeking FoHF and global tactical asset allocation managers to run $50m each
AGAINST THE GRAIN
AVON’S DECISION TO MAINTAIN ITS FOHF exposure contrasts to the steps its UK public pension fund peers have taken in recent months. While some have chosen single-manager hedge funds, others have favoured diversified growth funds or other alternatives. The £1.8bn ($2.91bn) scheme for Dorset County decided in March to replace its roughly 4% allocation to FoHFs Gottex and International Asset Management with an infrastructure portfolio while Wiltshire County Council pension scheme decid-ed to redeem from Jubilee Advisors (previously Fauchier Partners) after put-ting it on watch in 2012.
KOREA POST SAVINGS BUREAU TOTAL AUM $65bnACTIVITY Seeking manag-ers offering multi-class absolute return strategies for Global Tactical Asset Allocation mandate
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INVESTOR
EXAMINERS FROM THE SEC’s Office of Compliance Inspections and Examinations (OCIE) have denied a mandate to find deficiencies at every hedge fund manager they review in an exclusive interview with sister magazine HFMCompliance.
“We do not have a mandate that we have to come back from an examination with a deficiency,” said senior specialised examiner Marc Wyatt, who was previously a partner at global multi-strat hedge fund Stark Investments.
His comments follow sev-eral operations profession-als at hedge fund firms telling HFMCompliance that they feel the SEC is determined to find fault.
One GC at a $5bn-plus New York hedge fund firm said she thought examiners were single-minded in looking for errors.
She said that one of their com-ments following an inspection instructed them to change the date in a footnote even though the date was correct in several other circumstances.
Another GC at a $1bn US firm noted the infractions were equally minor and that the manager had disagreed with the SEC on wheth-er they needed to change.
Wyatt also said that “by no means is enforcement the sole means to get a recovery for an investor”.
“If a registrant agrees to reme-
diate an issue during the exam process, that’s often an efficient means of recovery.”
Jane Jarcho, head of the SEC’s investment adviser/company examination programme, echoed Wyatt’s sentiments.
Turn to page 19 for more from the exclusive interview.
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NFA chastises members for missing deadlinesTHE NATIONAL FUTURES Association (NFA) has issued a warning to CPOs and CTAs to file reports on time after deadlines con-tinued to be missed.
A number of members are fail-ing to file Form-PR and Form-PQR within the required periods, the self-regulatory organisation said in a notice to members last Wednesday.
Form PQR filings are due within 60 days of the quarters ending in March, June and September and within 90 days of the December quarter-end.
Form PR filings are due within 45 days of each quarter-end.
“Despite the importance of this information, each reporting period a number of members fail to file these reports in a timely manner,” said the NFA.
“Members should be aware that failing to timely file these reports is a violation of NFA rules and may subject the member to disciplinary action.”
It noted that in September its business conduct committee issued complaints against two firms for not abiding by its compliance rule.
The agency also updated its CPO Form-PQR to reflect “minor chang-es”, adding text on the cover page specifying that reporting must be in US dollars and any amounts convert-ed to US dollars must use the con-version rate on the reporting date.
Certain information about vari-ous relationships, such as third-party administrators, is also now required.
The updated form will be avail-able from 6 October in the electron-ic EasyFile system for the quarter ending on 30 September.
For CPO PQR XML filers, an updated schema is also available for upload in the XML Documentation section of EasyFile.
There are no changes to the CTA Form PR this quarter.
Spanish Finance Ministry reveals draft AIFMD lawSPAIN HAS EDGED closer toward the implementation of Europe’s AIFMD with a new set of draft laws intended to transpose the Directive published only in Spanish on 19 September.
The Spanish Ministry for Economy and Competition revealed the 60-page Royal Decree, which will combine the new AIFM leg-islation with pre-existing Ucits laws.
The draft is open to comments until 7 October to be submitted via email to [email protected].
The AIFMD first came into law across Europe on 22 July 2013, but several countries have lagged in implementation, including Spain and Italy.
REGUL AT ION
22 DEC 14RESOLUTION DIRECTIVE/CRDConsultation ends on EBA consultation paper on when an institution is considered ‘failing’ or ‘likely to fail’
5 JAN 15MIFID IIComments due on the definition of derivatives as financial instruments
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If you would like to comment on any compliance-related news story or development, contact Maiya Keidan, HFMCompliance editor, at [email protected]
30 NOV 14UCITS VEsma to submit technical advice on delegated acts to European Commission
20 OCT 14AIFMD – UKCertain full-scope managers begin submitting Annex IV for the period ending on 30 September
15 OCT 14MAD IIConsultation closes on draft regulatory and implementing technical standards
SEC examiners deny deficiency mandateOCIE staff tell all in exclusive HFMWeek interview
REGUL AT ION
COMPLIANCE
THE WEEK
An Australian Supreme Court ruling has prevented the Pacific island of Nauru (pictured) from sliding into financial ruin in its battle against New York-based Firebird Man-agement. The hedge fund has claimed it is owed A$31m ($27m) by the Nauru government for now-defaulted bonds its Firebird Global Master Fund owns, and has obtained a court order to freeze the nation’s bank accounts. The move would have prevented the island from paying its public servants or providing basic services.
ENFORCEMENT
THE SEC LAST WEEK ACCUSED two individuals of trading on insider information on Herbalife. The agency said Filip Szymik and Jordan Peixoto had advance knowledge that hedge fund manager Bill Ackman had taken a $1bn short in the company it branded a “pyramid scheme”. Szymik was ordered to pay back the $47,100 he received in profit from purchasing Herbalife put options one day ahead of the announcement.
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A VETERAN TRAD-ER OF US equities, who led a global prop trading desk during 13 years at Morgan Stanley, will be the lat-est manager to launch a hedge fund on Trium Capital’s London-based platform.
HFMWeek has learned that Steven Cress will start trading with Cress Capital Management on 1 November backed with $10m from Trium, its largest individual seed ticket to date.
His new offering will trade a US long/short equity strategy from London, using quantita-tive models developed by Cress at Morgan Stanley to select a pool of stocks, which he narrows down and picks on a discretion-ary basis.
Cress joined Morgan Stanley in 1995 and rose to be head of its global proprietary trading desk employing quantitative and thematic strategies. He then had spells at Northern Trust in London and Sunrise Brokers in
13-year Morgan Stanley vet leads London launchCress’s l/s equity strategy wins Trium’s biggest seed ticket
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Good Harbor buys Broadmeadow CapitalGOOD HARBOR FINANCIAL (GHF), a $10bn firm based in Chicago, has acquired Boston invest-ment manager Broadmeadow Capital.
The acquired firm manages a Global Tactical Asset Allocation (GTAA) portfolio via separately man-aged accounts (SMAs), while Good Harbor runs its strategy via SMAs and liquid alternatives.
Following the acquisition, GHF is expected to launch a levered version of Broadmeadow’s offering, probably before the end of the year, according to a source. Next year it is expected to roll out a mutual fund version of the strategy. The fund’s names have not been determined.
Eric Biegeleisen and David Cabot, Broadmeadow Capital’s co-founders, have become portfolio manager and managing director at GHF.
The duo worked together at Windhaven Investment Management where Biegeleisen was director of research until December 2012 and Cabot was head of institutional sales until March 2013. They also worked together at Windward Investment Management, where Biegeleisen was a senior investment analyst between July 2007 and November 2010 and Cabot was a principal from June 2004.
The firms declined to [email protected]
ACQUIS IT IONS
If you would like to comment on any start-up-related news story or development, contact Elana Margulies, HFMWeek chief reporter, at [email protected]
LAUNCH ACTIVITY CONTINUES ON P13
New York, from where he has just relocated.
His firm is in the pro-cess of hiring another employee to work on investments. All opera-tional support will be provided by Trium’s platform, while a mar-keting push to attract
broader capital is planned once the firm has started trading.
Cress Capital is one of three new funds Trium aims to launch at the start of November.
The largest is Africa Merchant Capital (AMC), whose long-only fund looks set to launch with between $15m and $20m, of which Trium will provide less than $5m.
Jonathan Kruger, previously with Prescient Africa Equity Fund, is AMC’s portfolio man-ager while former Templewood Merchant Bank employee Cobus Visagie, who founded the firm, will lead its marketing effort.
The third aiming to launch next month is QSI, a new man-aged futures fund being launched
by former Graham Capital and AHL managers Simon Crooks and Lee Bostock. That fund is being backed by Trium Capital with $5m, its standard seeding amount.
Trium launched Westray Capital Management, a new long/short equity offering led by former Lansdowne Partners analyst Selvan Masil, earlier this year.
The new launches bring the number of funds it supports on its main “Trium Managers Alliance” platform to eight.
Trium Capital founder Gareth James confirmed details in a phone conversation with HFMWeek.
CRESS CAPITAL MANAGEMENT
STRATEGY US long/short equity LAUNCH DATE Nov 2014
KINTBURY CAPITAL
LAUNCH DATE Q4 2014
PRIVIUM FUND MANAGEMENT
NAME Privium Sustainable Alternatives Fund STRATEGY Micro finance and sustainable real estate LAUNCH DATE Q4 2014
RIVERCREST CAPITAL
NAME RiverCrest Global Equity Ucits STRATEGY Ucits-compliant global long/short equity LAUNCH DATE AUG 2014
GOING LIVE
IN A BUSY MONTH FOR TRIUM, the first fund to be launched on its new Ucits platform, which works with third-party funds, is also aiming to go live in the next few weeks.
Thomas Karlovits, who previously headed up equity research at Kepler Cheuvreux, is heading up the Blackwall Capital Investment offering, a long/short equity fund based in Geneva, Switzerland.
$10m CRESS CAPITAL’S SEED
FROM TRIUM CAPITAL – ITS LARGEST TO DATE
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FORMER GOLDMAN SACHS cur-rency trader Steven Cho has hired ex-Metacapital Management CCO Jason Kenny in the same role at new firm Kings Peak Asset Management, which is due to start trading this month.
HFMWeek has learned that he has appointed his sister Helen Licata as COO for the New York-based global macro start-up.
According to an investor document seen by HFMWeek, the discretionary offering will combine short-term tacti-cal trading with longer-term strategic investments. It will seek opportunities in developed and emerging markets
across numerous asset classes includ-ing foreign exchange, interest rate products, commodities, credit and equities.
Cho spent 18 years at Goldman Sachs, latterly as global head of G10 spot and forward trading. He is sched-uled to meet potential investors in London next month at a cap intro event organised by Goldman Sachs.
Kenny worked at Deepak Narula’s mortgages-focused Metacapital as CFO/CCO from 2007 until his departure earlier this summer.
HFMWeek reported in June that Metacapital hired Daniel Caffarelli
from Guggenheim Fund Solutions to replace Kenny.
Licata most recently founded consulting firm Tembo Advisors in 2009. Her earlier investment career positions included spells at Gleacher Fund Advisors and Citi Alternative Investments.
A Kings Peak spokesperson did not comment by press time.
Goldman Sachs (its New York headquarters, pictured) has purchased a 10% stake in Caxton Associates. The move marks the third investment made by Petershill II, the fund established by the investment bank to buy equity stakes in hedge funds. Bruce Kovner’s firm manages approximately $8bn across currencies and interest rates. Petershill II bought stakes in credit hedge fund Knighthead Capital Management and equity long/short fund Pelham Capital earlier this year.
THE WEEK
Kings Peak launches, former Metacapital CFO on boardSteven Cho starts new currencies fund in New York
Pershing Square to launch listed fundPERSHING SQUARE Capital Management has announced that shares in a new $3bn listed fund will start trading on Amsterdam’s Euronext exchange on 13 October.
The New York-based firm raised $2.73bn in an initial public offer-ing, which could be bumped up to $3.07bn thanks to an over-allotment option. Its founder, Bill Ackman, described the development as a “seminal event in the history of the firm”.
Pershing Square said that the shares were priced at $25, giving the vehicle a market capitalisation of $6.2bn. The firm added it has invested $129m of its own assets in a ten-year lock-up.
Ackman’s firm, which he founded in 2003, managed $13.1bn across all business lines at the end of June. Its new fund is aimed to provide a more permanent base of capital.
Former Moore Capital star Greg Coffey has emerged as an investor in Abbeville Partners, a London-based hedge fund started in May by his one-time protégé at GLG Partners, James Saltissi. Relational Investors, a $6bn US activist manager, is shutting down because of the return of co-founder Ralph Whitworth’s throat cancer. He initially took a leave of absence in July. Neuberger Berman Group is buying Orchard Square Partners, a credit hedge fund, from Ramius Capital, a major share-holder. The $475m fund will continue to be managed by Orchard Square’s 11-member team. MCP Asset Management has launched the Terra Grove Pan Asia Fund with $62.5m. It will be managed by Masakatsu Hayashi and three other team members, investing across Asia and Australia. Rasini Fairway Capital has launched its second externally managed Ucits fund, named RiverCrest Global Equity UCITS. Its plan was first reported in HFMWeek earlier this year.
LAUNCHES IN BRIEF S P O N S O R E D BY
L A U N C H E S & CLOSURES I N B R I E F
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FALLING DOLLAR Allocating $1,000 to a hedge fund trading currencies in January 2013 would have yielded less than an invest-ment with an average hedge fund SOURCE: HFR
BALLIOL CAPITAL
STRATEGY Credit LAUNCH DATE TBD
MCP ASSET MANAGEMENT
NAME Terra Grove Pan Asia Fund STRATEGY Pan Asia LAUNCH DATE Aug 2014
GOLDMAN SACHS ASSET MANAGEMENT
NAME Goldman Sachs MLP and Energy Renaissance Fund STRATEGY Alternative income focused on MLPs and energy LAUNCH DATE Sep 2014
GOLDMAN SACHS ASSET MANAGEMENT
NAME Goldman Sachs Long Short Fund STRATEGY ‘40 Act fundamental long/short equity LAUNCH DATE Sep 2014
CANDLEWOOD INVESTMENT GROUP
NAME Candlewood Puerto Rico SP STRATEGY Distressed debt LAUNCH DATE Sep 2014
SEARCH ACTIVITY
1 2 H F M W E E K . CO M 9 - 1 5 O C T 2 0 14
A WEEKLY COMPENDIUM OF RECENT HEDGE FUND SEARCHES AND INVESTMENT MANDATES
S E A R C H A C T I V I T Y
CITY OF MOBILE POLICE & FIRE RETIREMENT PLAN TOTAL AUM Not disclosedCONSULTANT Gray & CompanyACTIVITY Considering up to four managers for possible investment
AURORA INVESTMENT MANAGEMENT TOTAL AUM $9.1bnACTIVITY Mulling increased exposure to “portfolio hedge” strategies. Also researching bank merger space
JUL 2014
SAN JOSE FEDERATED RETIREMENT SYSTEM TOTAL AUM $2.5bnCONSULTANT AlbourneACTIVITY Issuing mandate to hedge fund manager worth 5% of overall investment portfolio
KAZAKHSTAN NATIONAL INVESTMENT CORPORATION TOTAL AUM $110bn (approx)
AUG 2014
TEXAS ERS TOTAL AUM $21bn CONSULTANT AlbourneACTIVITY Seeking two directional growth hedge fund managers to invest up to $250m each
CARNEGIE MELLON UNIVERSITY TOTAL AUM $1.07bn ACTIVITY Looking to hire two or three HFs running relative value and market neutral strategies in the next six months
ACTIVITY Issued RFP for hedge fund consultant to take on $300m mandate
MORGAN STANLEY WEALTH MANAGEMENT TOTAL AUM $1.9trnACTIVITY Seeking long/short, event-driven and relative value managers
ILLINOIS STATE UNIVERSITIES RETIREMENT SYSTEM TOTAL AUM $16.4bnCONSULTANT NEPCACTIVITY Planning to issue an RFP in its first search for hedge funds
PENNSYLVANIA TURNPIKE COMMISSION TOTAL AUM $6.8bnCONSULTANT Investment Performance Services ACTIVITY Searching for FoHF manager for a mandate of around $13m
Continued from page 8, compiled by HFMWeek
SEP 2014
MERRANT FONDER TOTAL AUM $100m ACTIVITY Seeking two managers in relative value fixed income
ILLINOIS TEACHERS’ RETIREMENT SYSTEM TOTAL AUM $45.3bn CONSULTANT AlbourneACTIVITY Seeking two to three non-directional hedge funds for allocations of between $150m and $200m each
To comment, contact Alex Cardno at [email protected]
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9 - 1 5 O C T 2 0 14 H F M W E E K . CO M 13
LAUNCH ACTIVITY
A WEEKLY COMPENDIUM OF HEDGE FUND L AUNCH ACTIVIT Y
L A U N C H A C T I V I T Y
STRATEGY Event-driven LAUNCH DATE Q3, 2014
BRIDGEWATER ASSOCIATES NAME Optimal Portfolio Strategy STRATEGY Global macro LAUNCH DATE Sep 2014
MARATHON ASSET MANAGEMENT NAME Marathon Structured Product Strategies Fund STRATEGY Debt LAUNCH DATE Aug 2014
SCOPERTA CAPITAL STRATEGY Long/short TMT LAUNCH DATE Jan 2015
WHITEBOX ADVISORS NAME Whitebox Special Opportuni-ties Fund E STRATEGY Debt LAUNCH DATE Oct 2014
C-VIEW NAME C-View Stelrox Systematic Cur-rency Strategy STRATEGY Currency LAUNCH DATE Sep 2014
CITY FINANCIAL INVESTMENT CO. STRATEGY Long/short Chinese stocks and pan-Asian corporate bonds LAUNCH DATE TBD
CT INVEST STRATEGY European equities LAUNCH DATE Q4 2014
EAGLE BAY CAPITAL NAME Ibis Global Partners STRATEGY Long/short global macro LAUNCH DATE Nov 2014
361 CAPITAL NAME 361 Global Long/Short Equity Fund STRATEGY Long/short equity mutual LAUNCH DATE Sep 2014
LANSDOWNE PARTNERS STRATEGY Energy LAUNCH DATE TBD
ACION PARTNERS STRATEGY Pan-Asia, event-driven LAUNCH DATE Q1 2015
SYSTEMATICA INVESTMENTS STRATEGY Quantitative LAUNCH DATE Jan 2015
AQR CAPITAL MANAGEMENT NAME AQR Style Premia Alternative LV Fund STRATEGY Low-volatility version of ‘style premia alternative’ fund LAUNCH DATE Sep 2014
JHL CAPITAL NAME JHL Skylander Fund STRATEGY Short-biased LAUNCH DATE Sep 2014
PW PARTNERS NAME PW Partners Activist Fund 3 STRATEGY Activist LAUNCH DATE Aug 2014
SEVEN SAGES CAPITAL NAME Wolf Hedge Global STRATEGY Global macro LAUNCH DATE Sep 2014
PERRY CREEK CAPITAL STRATEGY Hybrid hedge fund and private equity LAUNCH DATE Q3 2014
PINZ CAPITAL MANAGEMENT NAME Pinz Capital International
Continued from pages 10&11, compiled by HFMWeek
REPORTED OCTOBER 2014
4010 CAPITAL NAME 4010 Partners STRATEGY Equity long/short LAUNCH DATE Nov 2014
BLACKSTART CAPITAL STRATEGY Long/short energy LAUNCH DATE Jan 2015
LIVINGSTON CAPITAL NAME Livingston Capital Partners 1 and 2STRATEGY Long/short equity LAUNCH DATE Jan 2015
PVE CAPITAL NAME Special Situations Credit Strategy STRATEGY Structured credit and credit portfolio trading LAUNCH DATE Q4 2014
WESTERN & SOUTHERN STRATEGY International LAUNCH DATE TBD
EQUITIES GLOBAL ANALYTICSSTRATEGY Enhanced levered short-term statistical arbitrageLAUNCH DATE Q3 2014
REPORTED-SEPTEMBER 2014
JANUS CAPITAL GROUPNAME Unconstrained Fund STRATEGY Unconstrained bond LAUNCH DATE TBD
LONGBOARD NAME Longboard L/S Equity FundSTRATEGY Long/short equity trend-following 40 Act LAUNCH DATE Q4 2014
To comment, contact Elana Margulies at [email protected]
COMMENT&ANALYSIS
THE LONGVIEW
F atca – the US international information sharing regime – officially took effect on 1 July 2014 as a way to ensure that American citizens with financial assets
outside the US report all of their global invest-ment income.
Though initially just a US law, hedge fund managers and their fund complexes have found themselves required to comply with Fatca as it has become internationally adopted through a series of Intergovernmental Agreements (IGAs) and corresponding local legislation. Compliance with Fatca is now a matter of local law in many jurisdictions. At worst, a non-com-pliant entity may be subject to a 30% withhold-ing tax on certain types of income.
Fatca has been or will be written into local law in many countries. Most notably, the UK, Cayman Islands, Ireland, Guernsey, Jersey and Luxembourg have all signed IGAs with the US. As such, fund managers are finding it exceed-ingly difficult to operate in a world without hav-ing to address the Fatca status of each entity within its fund complex or identify the Fatca status of its investors.
While all hedge fund managers should have addressed their own Fatca classification by 1 July 2014, there are a number of procedures required to be implemented immediately or
requiring action in the next three to six months. For those entities that meet the relevant defini-tion of ‘Financial Institution’, or otherwise fall within the scope of Fatca, these procedures may include:
Providing counterparties with the appropri-ate level of self-certification (eg Form W8) as to each entity’s Fatca classification and as required by third partiesRegistration for those Financial Institutions located in Model 1 IGA jurisdictions to obtain a Global Intermediary Identification Number (GIIN). Financial Institutions have until 31 December 2014 to register if they have not done so alreadyEnsuring Fatca on-boarding procedures for new account-holders have been in place since 1 July 2014. These new procedures require a Financial Institution to identify all of its investors at the time the account is openedPerforming due diligence procedures for pre-existing accounts (those present at 30 June 2014) to identify accounts held by US persons. Generally due diligence is required to be completed before 30 June 2015 (or 30 June 2016 in the case of low-value accounts)Adhering to ongoing Fatca compliance obligations as the fund complex continues to evolve through its life cycle. This may
include updating changes to an entity’s current Fatca classification with the IRS or addressing a newly formed entity’s Fatca classificationEnsuring the relevant entity within the fund complex is ready to report to the relevant jurisdictions as required beginning in 2015. Though reporting will be required on cer-tain US and non-compliant account-hold-ers, each jurisdiction may have slightly dif-ferent reporting procedures that will need to be complied with.
BEYOND US FATCAUK Crown Dependencies and Overseas Territories The UK and its Crown Dependencies and Overseas Territories entered into IGAs in October 2013. These agreements work in much the same way as US Fatca, with similar timelines, though a later reporting date (effec-tively, it is similar to Fatca but with a one-year deferral). These agreements mean Financial Institutions will have responsibility for identify-ing and reporting on investors from the UK or Crown Dependencies and Overseas Territories.
The implication for a Cayman-based fund is that there is a requirement to identify and report on UK resident investors as well as US citizens.
Common Reporting Standard (CRS)The CRS is an initiative led by global body the OECD, to widen the scope of tax transparency. All 34 member countries have endorsed the CRS for automatic exchange of tax informa-tion, with 65 jurisdictions including Cayman and the UK agreeing in principle to implement-ing CRS. Where Fatca requires reporting on US and in certain cases UK investors, CRS will likely require reporting on investors from many different jurisdictions.
CRS is still in development, but is likely to come into effect on 1 January 2016 at the earliest.
RUSSELL MORGAN, partner at EY’s hedge fund tax practice
F ive months ago, the 11 European member states participating in implementing a Financial Transaction Tax (FTT) pledged
to finalise a proposal by the end of the year. But with less than 90 days until the end of 2014, has criticism from par-ticipating countries over the scope of the tax put the brakes on this ambitious levy?
Skadden’s James Anderson says a final proposal is unlikely by year-end, with some previous supporters of the tax, such as Germany, now only “luke-warm” about its implementation.
Germany was a key driver of the
Franco-German pact that aimed to push the tax through via the enhanced co-operation mechanism in which nine or more agreeing members can implement an initiative.
“The political process has made find-ing an acceptable proposal very chal-lenging,” agrees Mayer Brown partner Sandy Bhogal.
During a gruelling three-hour grill-ing from the economics committee last week, UK candidate for the European Commission Lord Jonathan Hill refused to offer an opinion on the FTT. The current UK government is a strong opponent of the tax.
The EU Council Working Group held a meeting on the topic on 24 September, so further announcements should follow soon – although what shape or form they take is anybody’s guess.
There are also question marks over the UK’s position depending on the results of next year’s general election. Labour has previously indicated sup-port for a globally introduced FTT. “Given [Labour’s] recently announced intended attack on hedge funds, may-be they are more interested in a fully-fledged securities transaction tax,” notes Anderson.
THE SHORTVIEWMAIYA [email protected]
9 - 1 5 O C T 2 0 141 4 H F M W E E K . CO M
FATCA HAS BEEN OR WILL BE WRITTEN INTO LOCAL LAW IN MANY COUNTRIES”
RUSSELL MORGAN Foreign Account Tax Compliance Act (Fatca)
THE COMPLETION OF THE OFFERING OF PERSHING SQUARE HOLDINGS IS A SEMINAL EVENT IN THE HISTORY OF THE FIRMBill Ackman sounds a bullish note after a $3bn IPO for his new listed fund
BANKS ARE ONLY INTERESTED IN COOKIE-CUTTER DEALSOmni Partners founder and head of risk, Steve Clark, on why hedge funds are moving into the lending space
BY NO MEANS IS ENFORCEMENT THE SOLE MEANS TO GET A RECOVERY FOR AN INVESTORSEC senior specialised examiner Marc Wyatt speaks exclusively to HFMWeek
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Guernsey lays on charm despite HK protests Crown dependency unmoved by potential breakdown of social order
This one’s for the kidsCharities line up big names to raise money for vulnerable children
Pro-democracy protesters are currently taking part in some of the biggest street protests seen in Hong Kong since the
former British colony was handed over to the Chinese in 1997.
Tear gas has already been used to try and disperse the crowds, some of whom are camped out on the streets and have blockaded gov-ernment offices as they demand a free vote to elect the territory’s new leader.
With all this in mind, it probably wasn’t the best week for a delegation from the Crown dependency island of Guernsey to head over to Hong Kong to “reinforce the island’s finan-cial services offering to current and prospective Asian contacts”.
When Inside Hedge politely enquired that, perhaps, this wasn’t the best week to be flogging your wares, seeing as the territory was teetering on the brink of considera-ble civil unrest and all, a representa-tive said the charm offensive plans were still going full steam ahead.
Perhaps hearing about how Guernsey’s wealth management professionals can offer well bal-anced diversified growth portfo-lios could be a welcome distrac-tion to many from worries about the possible breakdown of social order.
H edge fund-backed Dallas charity Capital for Kids supports organisations that educate, protect and
encourage vulnerable young peo-ple and is celebrating its 10th year. In honour of this milestone, it says this year’s annual event, at the F.I.G on Ross Avenue on 21 November, will be a special one. For more
details and to join a number of prominent hedge fund managers and investors at the event, go to www.capitalforkids.org
Separately, the Sohn Conference Foundation is making its first foray into Canada on 23-24 October for the inaugural Sohn Canada Investment Conference, a partner-ship with Toronto-based Capitalise
for Kids. Again it will bring togeth-er investment professionals to share their best long and short ideas in support of SickKids Foundation, which funds pediatric research and initiatives for the world-renowned Hospital for Sick Children. More information can be found at www.capitalizeforkids.com or www.sohnconference.org.
The Inside Hedge ANY INSIDE INTEL? TIP US OFF AT:
THE WEEK IN QUOTES
9 - 1 5 O C T 2 0 14 H F M W E E K . CO M 15
1 6 H F M W E E K . CO M
FEATURE BANKING
9 -1 5 O C T 2 0 14
STEVE CLARK, OMNI PARTNERS
BANKS PRESENTLY ARE ONLY INTERESTED IN COOKIE-CUTTER DEALS. IF YOU FIT THEIR CRITERIA THEN YOU CAN HAVE THE MONEY, BUT IF YOU DON’T THEN THERE’S NO FURTHER DISCUSSION
”
HFMWeek takes a closer look at the way managers are filling a hole left by the banks pulling back from traditional lending activitiesBY JASMIN LEITNER
The onslaught of regulation aimed at curb-ing certain types of banking activity, such as lending to firms with riskier credit profiles or more unusual finance needs, has significantly altered the global financial system.
As banks face pressure to manage their balance sheets more prudently, hedge funds are stepping in to fill the void, with hedge fund giants Cheyne Capital, DE Shaw and Marshall Wace among those showing an in-terest in lending or loan-related strategies.
WHAT ARE THE MAIN DRIVERS?Post-2008 regulation has restricted certain banking ac-tivities that financial authorities believe could threaten the viability of the financial system during another crisis, highlights Jens Foehrenbach, credit strategy head at Man Group’s FoHF arm FRM.
“In the case of lending, this has been through the impo-sition of higher capital requirements,” he adds.
Another driver has been stress in the European banking system. “In 2009, European banks did not de-lever to the same extent as those in the US and were then hit by credit risk being induced into their supposedly safe and liquid eurozone sovereign bond portfolios. They cut back lend-ing, especially outside their home markets.
“These developments have created opportunities for funds to capture businesses that had historically been dominated by banks,” Foehrenbach adds.
Steve Clark, founder and head of risk at London-based Omni Partners, agrees. “Five years ago we recognised a
simple opportunity to lend money into a space that was no longer being catered for by the banks or other bank-fund-ed providers,” he says, explaining the context in which he seeded lending business Capital Bridging Finance Limited (CBFL), now a wholly-owned subsidiary of Omni.
Omni then launched the $833m Secured Lending Fund I, which uses investor capital to provide residential and commercial financing, in February this year.
Clark says investors are looking for ways to put money into the real economy. “Previously, the only direct way in-vestors could do this was through securitisation, which has been badly discredited.
“So there’s a tremendous opportunity for institutions like ourselves to create a conduit for money from the end suppliers of credit, such as pension funds and insurance companies, directly into the real economy.”
WHERE DO THE OPPORTUNITIES LIE?For New York-based private investment firm Shadow Tree Capital, there are three big opportunities: specialty finance company lending, asset-based lending and secured busi-ness lending.
“The gross returns we get from these areas is in the mid-teens. They have been particularly affected by the pull-back of bank capital, and usually the businesses involved gener-ate margins that are sufficient to pay those types of rates,” Henry Goodman, a principal at Shadow Tree, explains.
For Omni, the main focus so far has been short-term lending in the UK property market, on both a commercial and residential basis, which can yield between 12% and 15% annually in a fund.
Clark says: “No-one would go to us if they could get financing from a bank because we’re more expensive, but we’re much more willing to work with clients.
“Banks presently are only interested in cookie-cutter deals. If you fit their criteria then you can have the money and have it quite cheaply, but if you don’t then there’s no further discussion, they can’t do anything else for you.”
Clark adds that other opportunities, such as European-wide real estate debt or asset finance, could also be of fu-ture interest.
Peer-to-peer (P2P) lending platforms, which match lenders and borrowers across consumer credit, mortgages and SME-lending, are also starting to garner the attention of hedge funds and other alternative players.
Marshall Wace is currently deploying the £200m ($321m) it raised on the London Stock Exchange earlier this year when it floated P2P Global Investments, a com-pany set up to invest in P2P loans and platforms. “P2P lending has the potential to transform consumer and SME lending practices worldwide by disintermediating the banks,” Ian Wace, CEO of Marshall Wace, commented early this year.
P2P lending has become popular with structured credit
WHERE BANKS FEAR TO TREAD
H F M W E E K . CO M 179 - 1 5 O C T 2 0 14
ADAM L’ESPERANCE, LONG RIDGE PARTNERS
PREVIOUSLY, PROP TRADING AND INVESTMENT GROUPS AT BANKS WOULD HAVE BEEN THE MAIN INVESTORS BUT THEY DON’T EXIST ANYMORE, SO THE HEDGE FUNDS ARE FILLING THAT VOID
”
specialists, particularly because some platforms allow bid-ders to buy pooled loans through issued securities, explains Adam L’Esperance, founding member and partner at hedge fund-focused recruitment firm Long Ridge Partners.
“Previously, prop trading and investment groups at banks would have been all over this, they would be the main in-vestors but they don’t exist anymore, so the hedge funds are filling that void,” he says, explaining that the trend is also in-forming the type of positions he now recruits for.
BDCS AND BANKSBusiness development companies (BDCs) have also started gaining traction recently as a vehicle of choice to pursue the plethora of opportunities out there.
These SEC-registered entities, created as an amendment to the 1940 Act to invest in small and medium-sized com-panies, are an attractive way to tap into the retail investor space, says Brian Mitts, head of business development for Highland Capital Management’s alternative products and COO of NexPoint Advisors, an affiliate of Highland Capi-tal Management. Highland launched a healthcare-focused, non-traded BDC in August.
“Retail investors have a desperate need for yield, and we continue to see very low rates across the board. You can typically get higher rates through a BDC-type product, and there’s a lot of attraction for retail investors,” Mitts explains, adding that BDCs can yield between 7% and 7.5% per year.
BDCs can either be listed on a public exchange or can be structured as continuous, privately placed offerings, with Highland hoping to raise $1.5bn from its continuous offer-ing.
And while they can be a competitor to hedge funds and other players in the space, BDCs can also act as partners, Shadow Tree’s Goodman explains.
“A lot of these deals require syndication. We might have an appetite to lend $5m and the company needs $15m, so we might approach a BDC, or vice versa, and say we’re go-ing to do half of this deal, would you like to do the other half?”
CHALLENGES AND INVESTOR SENTIMENTL’Esperance notes that hedge funds need to bring in the rel-evant expertise, particularly as structuring the documenta-tion for these types of funds – which often have much longer lock-up periods and more complex terms – is expensive. “Hedge funds are recruiting a lot of fund accountants, who are experienced in accounting for these types of strategies, and there’s also a big focus on lawyers,” he says.
“We see a lot of lawyers who have structured these trans-actions for speciality finance companies or banks coming to hedge funds. If managers just rely on outside counsel it costs too much,” he adds.
Liquidity can also be a sticking point, with many indus-
try participants pointing to the importance of avoiding a liquidity/duration mismatch.
“Our fund is set up to have matched duration. It’s a pri-vate equity-style vehicle where you put money in, lend it and only get it back when the deals have closed – you can’t take your money out half way through,” Omni’s Clark ex-plains in relation to their fund.
“There are competitors who have vehicles allowing in-vestors some liquidity. That works fine unless too many people want to go to the door at the same time.”
Shadow Tree’s Goodman explains its fund is a hybrid vehicle, using a drawdown structure. “We enable investors access to this private debt market and pass through all re-lated income, like interest payments, structuring fees and royalties,” he says.
FRM’s Foehrenbach notes the “traditional” monthly or quarterly liquidity profile of hedge funds does not tally with lending activities. “We see the move of liquid hedge funds into the lending space critically.”
“We don’t invest in traditional hedge funds engaged in direct lending, as the asset-liability mismatch is most likely to hit funds when some portfolio companies require work-out solutions (i.e. more capital),” he says, explaining they prefer managers running more private equity-like vehicles.
“We like to see that the maturity of the loans matches the fund structure, with the inclusion of multi-year terms and capital call arrangements, and would only include these funds in products for clients that have an appropriate investment horizon.”
Robert Howie, head of Mercer’s European alternatives business, agrees that investors need to be aware of what they’re getting into. “They need to understand what the terms and conditions are and that these strategies are not going be like their regular long/short equity funds.”
Foehrenbach highlights another danger. Investor senti-ment, while constructive in creating stable, above-capital market yields, can also create pressure on managers to invest. This can lead to “sub-optimal credit selection”, he says.
“Credit due diligence is key as by nature these lending activities carry high risks,” he says, adding that competi-tion for loans between funds can also create deal origina-tion challenges.
While Omni Partners’ Secured Lending Fund I doesn’t have to rely on loan origination from external sources as CBFL fulfils this function, Clark explains that investors did question their ability to originate the amount of loans they had targeted ($100m). He adds that they were “well ahead” of this figure.
From direct mortgage origination to the world of bur-geoning P2P platforms, the sub-set of opportunities within the lending space is vast, with industry participants indicating that the pipeline of deals, as well as the demand from end consumers and business, is set to continue.
As Shadow Tree’s Goodman notes: “The need for capital is far greater than the amount out there, and the retrench-ment from banks is not going away.”
ANOTHER WAY ALTERNATIVE PLAYERS may exploit gaps in the banking system is to become banks themselves. Industry participants have indicated that several hedge funds in the UK are considering such a move, although HFMWeek understands that there have been no licence applications made to the FCA or the Prudential Regulatory Authority (PRA) yet .
BECOMING A BANK?
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9 - 1 5 O C T 2 0 14 H F M W E E K . CO M 19
FEATURE SEC
Last week , HFMWeek travelled to Washington, DC for an exclusive interview with top SEC examiners on the main regulatory issues for hedge fund managers. Despite side-stepping some questions, the agency had some key take-homes for managers BY MAIYA KEIDAN
On a quiet street in Washington, DC, tucked just a few metres behind the 100-year-old, white-pillared train station, sits the Securi-ties and Exchange Commission building. The towering concrete and glass structure oozes the promise of protection. And it
was in this looming block, full of framed photographs of SEC leaders from times gone by, that HFMWeek met top examiners at the Office of Compliance Inspections and Examinations (OCIE).
Jane Jarcho, head of the SEC’s investment adviser/company examination programme, and senior specialised examiner Marc Wyatt sat down with the magazine in Jar-cho’s office overlooking the train tracks, to discuss current important issues for hedge fund managers.
Jarco and Wyatt side-stepped questions about ongoing SEC sweeps on cyber-security and liquid alternatives but were amenable to discussing general examination priori-ties, such as personal trading and deficiency letters.
The examiners denied the SEC had any intention to ban personal trading at hedge fund firms, despite the sugges-tion from some quarters that this could be on the agenda. “The securities laws do not prohibit personal trading, but there have to be policies and procedures around it,” said Jarcho.
Todd Kaplan, associate director at Kinetic Partners, said the SEC had indicated in a couple of examinations that they would like the practice to be banned altogether.
However, Wyatt was clear that while no ban was be-ing planned, personal trading was something the SEC would continue to question “because it has the potential for front-running”. He was previously a partner at global multi-strat hedge fund Stark Investments.
The OCIE examiners were equally adamant in denying a mandate to find deficiencies at every hedge fund man-ager they examined. “We do not have a mandate that we have to come back from an examination with a deficiency,” said Wyatt.
His comments follow several operations professionals at hedge fund firms telling sister magazine HFMCompli-ance that they feel the SEC is determined to find fault in every exam.
One GC at a $5bn-plus New York hedge fund firm said she thought examiners were resolute that they would find errors and noted that one of their comments related to the changing of a date in a footnote even though the date was correct in every other instance.
Another GC at a $1bn US firm noted the infractions were equally minor and that the manager had disagreed with the SEC on whether they needed to change.
Wyatt also said that “by no means is enforcement the sole means to get a recovery for an investor”. “If a regis-trant agrees to remediate an issue during the exam process, that’s often an efficient means of recovery.”
Perhaps as interesting as examination priorities was the SEC’s keenness to emphasise the strong relationship it sees between compliance officers and the US regulator. “We regularly hear from compliance officers that they leverage our exam findings to get more resources,” said Jarcho.
For its part, the SEC expects a compliance officer to understand its responsibility to the SEC. “We work with compliance officers and they should be keeping a record of compliance issues and the response to issues raised.”
Her comments follow SEC chair Mary Jo White last October rattling compliance professionals at hedge fund managers by suggesting that a partnership should exist be-tween themselves and the regulator. “If the SEC thinks we are their partner, they need to tell us for sure,” said a GC and CCO at a $1bn US firm, adding that he believed the compliance officer’s allegiance was to the manager.
Perhaps this view of compliance officers as partners shouldn’t be a surprise, with so many industry participants telling HFMWeek that the SEC is more open and transpar-ent than it has been in the past with White at the helm. “The SEC is putting out more guidance than ever before and using the media more to deliver their message to the industry,” said one deputy GC at a multi-billion-dollar US manager.
THE SEC
THE SEC HAS MADE INVESTIGATING cyber-security protections and how liquid alternatives are sold to investors a top priority. Examiners only recently launched the cyber-security sweep while the liquid alternatives sweep was conducted between May and July, and a full analysis of policies and procedures at firms offering these products is set to begin on the data. However, as part of its presence exams, the SEC is also generally targeting:
Outdated or inconsistent valuation procedures Conflicts of interest Regular external audits of all accounts Adequate disclosures Appropriate benchmark comparisons Stating actual performance, not historical back-tested returns
SEC PRIORITIES
Jane Jarcho, head of the SEC’s investment adviser/company examination programme, OCIE
Marc Wyatt, senior specialised examiner, OCIE
HFMWEEK MEETS
Lawson ConnerCompliance. In safe hands.
London: +44 207 305 5810
9 - 1 5 O C T 2 0 14 H F M W E E K . CO M 21
FEATURE CO-INVESTMENT
THERE IS A TREND OF HEDGE FUNDS WORKING WITH INVESTORS THEMSELVES TO SUPERSIZE SOME OF THE HOLDINGS A HEDGE FUND HAS CONVICTION OF
” KEVIN GUNDLE, FOHF AURUM
Factors such as the lack of in-house expertise at larger investors have caused an increase in the number of co-investment dealsBY ALEX CARDNO
As investor demand for bespoke solutions grows, more hedge funds are entering into co-investment deals to create specific strategies to meet the needs of allocators who are no longer happy to be bundled into mainstream strategies.
The lack of in-house expertise at many big investors has been highlighted as a driver of the growth of co-in-vestment agreements where the manager creates a be-spoke strategy to be run for the investor.
Nick Vamvakas, head of Investcorp’s single manager business, explains: “Co-investments have been occurring for a few years, but now they are becoming more popular.
“Investors are increasingly looking for these types of opportunities because they do not have the in-house ca-pabilities to do it themselves, which is why they look for a partner.”
Typically, the process involves a manager spotting an opportunity and creating a bespoke fund or special purpose vehicle (SPV) designed specifically to pool the hedge fund’s own capital with that of an investor or se-lected investors to take advantage of market dislocation.
Co-investment often occurs with a FoHF as a princi-pal investor with additional capital provided by an insti-tutional investor, which may not have in-house expertise.
This is particularly prevalent in the activist space, rather than popular strategies such as long/short equity, which lend themselves less well to the practice.
Kevin Gundle, CEO of FoHF Aurum, says: “Co-investment tends to be a more long-term thematic ap-proach. So, an activist manager might be trying to unlock value in a business, and a co-investment gives the hedge fund manager an ally when he might be constrained on what he can invest to obtain a board position.
“So, an investor might inject more capital which al-lows the manager to obtain a board position and get their proxy vote if it comes to that. The managers sur-round themselves with people who are in the trenches with them.”
Gundle adds that with banks retrenching from risk due to regulatory rules and burdensome capital require-ments, hedge funds are starting to see more special situ-ations where they can take advantage of co-investment opportunities.
There is significant interest in such deals from larger institutions such as sovereign wealth funds (SWFs), en-dowments and US public pension funds.
Arizona Public Safety Personnel Retirement System,
for example, is currently mulling $50m of direct and $50m of potential co-investments in the Melody Capital Partners Onshore Credit Fund.
Meanwhile, in February this year, the New Jersey Di-vision of Investment handed a $300m ticket to Solus Al-ternative Asset Management specifically for use in special opportunities, allowing the firm to invest up to two-thirds of the allocation in an opportunistic event-driven and spe-cial situations credit strategy and up to two-thirds in “high-conviction co-investment opportunities”.
There are often two components to co-investment, Gundle adds: “You have co-investment in other hedge funds where a pension might invest in a multi-manager fund and say they would like to allocate separately to some of the individual managers in that multi-manager fund.
“Then there is a trend of hedge funds working with investors themselves to supersize some of the holdings a hedge fund has conviction of. Some institutional investors want to work with an adviser with skin in the game rather than a consultant rating a manager.”
Gundle says fees will often work out cheaper for inves-tors in a co-investment vehicle if it is used more as an activ-ist long-only type of investment.
But Vamvakas adds: “Every investment is driven first and foremost by return, then belief in the space and the opportunities that exist. Fees are always important of course, but I believe the drivers of co-investment are the opportunities and the extra return enhancement they can provide that investors cannot get on their own.”
TIME TO LOOK AT CO-INVESTING?
Wedded to the theme of co-investment is emerging evidence of a migration of talent from hedge funds to institutional investors.
Jeremy Robertson, partner at executive search firm CT Partners, explains this is especially prevalent among smaller hedge funds struggling to raise assets, resulting in an increasing migration of talent from smaller funds to in-house teams at institutional investors where the capital base is more stable.
He says the creation of in-house teams is more common among larger allocators trying to replicate the multi-asset advisory capabilities offered by large hedge funds such as AQR or Bridgewater at a lower cost.
“You have to be a large institution to consider it and it’s often confined to the very large global institutions,” Robertson explains. “The most common scenario is taking on internal managers to complement external managers.”
But cost is where the problem lies, he adds, because there is some hesitation by institutions to run internal strategies due to the compensation or salary levels expected by hedge fund types.
There have also been cases where it has gone the other way, with internal teams leaving institutions to set up their own firm, forcing the investor to rebuild or revert to external managers.
As Edward O’Malley, hedge fund consultant at Cambridge Associates, explains: “The costs would be lower than hiring external managers but it presents other issues around costs for other stakeholders at institutions, because remuneration of the people hired can be controversial.
“Anecdotally, it’s not a one-way street. Certain US endowments have operated this way for years and notably some have made a shift back towards more external managers.”
TALENT MOVING TO ALLOCATORS?
2 2 H F M W E E K . CO M
FEATURE PHILANTHROPY
9 -1 5 O C T 2 0 14
ROB DAVIS, MCALINDEN RESEARCH PARTNERS
[PREVENTING CHILD ABUSE] WAS A CAUSE I COULD BE REALLY ENTHUSIASTIC ABOUT AND IT WAS PARTICULARLY MEANINGFUL TO ME
”
HFMWeek takes a look at the hedge fund industry ’s various philanthropic endeavours, and finds out what motivates managers to support certain charitiesBY ELANA MARGULIES
With giving season just around the cor-ner, hedge fund-backed charities and professional associations around the globe are continuing to build on the billions of dollars already raised col-lectively to fund initiatives that are
close to their hearts. The Robin Hood Foundation, started by hedge fund
luminary Paul Tudor Jones, has raised more than $1.95bn since its inception in 1988 to fight poverty in New York, raising $60m at its most recent annual gala in May.
Hedge Funds Care (HFC) raised around $2m at this year’s New York Open Your Heart to the Children Ben-efit to prevent and treat child abuse, five times the amount raised at its first event in 1999, while 100 Women in Hedge Funds (100WHF) has raised over $33m since inception for charities focused on women’s and family health, educa-tion and mentoring, receiving $1.27m at last year’s annual New York Gala.
Additionally, High Water Women (HWW) has raised
an average of $500,000 annually over the last few years to promote financial literacy and microfinance, and A Leg To Stand On’s (ALTSO) Hedge Fund Rocktober-fest in New York and Chicago last year raised approxi-mately $500,000 combined to provide children in devel-oping countries with prosthetic limbs and life-altering surgeries.
A newer charity, Portfolios with Purpose (PwP), founded in 2011, hosts an annual stock selection compe-tition where hedge fund managers and other investment professionals compete on behalf of their favourite chari-ties. It has raised $474,100 since its inception, receiving the most money this year, $264,100, an increase from $185,000 in 2013 and $25,000 in 2012.
CHILDREN With the money raised from the New York Gala, along with galas and smaller events in other cities around the globe, HFC has given out 100 grants totalling more than $40m to non-profits that work to prevent and treat child abuse.
Rob Davis, managing director at McAlinden Research Partners, founded the organisation in the autumn of 1998, a pivotal period in the hedge fund industry as it dealt with the effects of Long Term Capital Manage-ment’s downfall. He says preventing child abuse was a cause he felt passionate about since his time working as a
SWEET CHARITY
H F M W E E K . CO M 239 - 1 5 O C T 2 0 14
THROUGH OUR HEDGE FUND ROCKTOBERFEST EVENTS IN NEW YORK AND CHICAGO, OUR SUPPORTERS IN THE HEDGE FUND AND RELATED INDUSTRIES HAVE HELPED US IMPACT MORE THAN 12,000 CHILDREN
” GABRIELLA MUELLER, A LEG TO STAND ON
teacher after he graduated college. “It was a cause I could be really enthusiastic about and
it was particularly meaningful to me,” he says. Additionally, as the mainstream press was vilifying the
hedge fund sector following LTCM’s demise, he wanted to demonstrate that executives were able to give back to those in need.
As a prime brokerage executive at Montgomery Secu-rities at the time, he contacted hundreds of his friends in the industry and organised a party a few months later, in February 1999, at New York’s historic Pierre Hotel. Attended by 400 people, it raised $400,000. The annual Open Your Heart to the Children Benefit was formed in New York City and further events in other areas fol-lowed.
Capital for Kids, an asset management-backed charity that funds organisations in North Texas to support at-risk youth, will be celebrating its 10-year anniversary this year and has given grants totalling $8.7m to more than 50 different organisations related to this cause.
Reid Walker, a co-founder who currently runs Dallas-based family office Five T Investments and formerly founded hedge fund manager Walker Smith Capital, says he was also passionate about helping deprived children.
“To me, it is about a return on investment,” he says. “You can make a bigger difference in a kid’s life than you can in many others.”
Through contributions to ALTSO, more than 12,000 children with limb disabilities in the developing world have received free orthopaedic care.
“ALTSO works to provide children the treatment they need to access mobility and the critical opportu-nities mobility offers – like the ability to attend school and receive an education that will lead to meaningful employment,” says Gabriella Mueller, executive direc-tor. “Through our Hedge Fund Rocktoberfest events in New York and Chicago, our supporters in the hedge fund and related industries have helped us impact more than 12,000 children.”
FEMALE HEDGE FUND ASSOCIATIONS Female hedge fund associations, including 100WHF and HWW, have also seen members volunteer their time to charitable causes. 100WHF’s philanthropic initiatives focus on three themes: women and family health; edu-cation; and mentoring, with these respective themes ro-tated every year.
At the annual galas across the globe, the organisation picks a non-profit in one of these categories to receive the proceeds. At its New York event next month, the Cerebral Palsy International Research Foundation will be the beneficiary.
“When it comes to philanthropy, it was really a desire of the founding members of 100 Women in Hedge Funds to figure out a way, collectively, to make an impact on charitable organizations,” says CEO Amanda Pullinger.
Since its launch in 2005, HWW has focused on pro-moting financial literacy and microfinance through its volunteering initiative.
Reed Smith partner Alexandra Poe, one of HWW’s founders, says financial literacy was an important issue to them. The lack of other initiatives in this area led them to team up with financial industry legend Muriel Siebert in 2009 to launch the HWW Muriel Siebert Campaign for Financial Literacy After School.
As a result of this partnership, HWW has become one
of the largest providers of financial literacy programmes for middle and high school students.
“There is so much demand based on what we have done already,” she says. “It has been a tremendous theme and we are expanding from youth to young adults and we are even getting demand to expand to parents and other populations.”
Regarding microfinance, because HWW members are in financial services and are global-thinking, Poe says the organisation wanted to promote a global component to their volunteerism. In 2006, it launched a microfinance global risk consultancy.
“The microfinance sector is undergoing systemic and local transformation all the time,” she says. “We built our programme around our belief that financial professionals can make the most difference using our skills to advise microfinance institutions in addressing the demands of transformation, by consulting about risk management, growth planning and capital markets readiness.”
PORTFOLIOS WITH PURPOSEThrough PwP’s annual stock selection competition, hedge fund managers and other participants can choose which charities they would like to compete on behalf of. The most supported charities thus far have been the Wounded Warrior Project, New York Hedge Fund Roundtable and St. Jude Children’s Research Hospital.
“Through this contest, individuals are able to pool the resources of the group to make a significant impact on high-quality charities, especially those that are small, underfunded and under-the-radar,” says Stacey Asher, founder and CEO.
PwP has recently launched PwP Mini Games to en-able people or organisations to host their own stock se-lection competition, customised with their own param-eters including minimum market capitalisation, entry/trading fees, contest duration and size.
Additionally, Asher says the mini game structure can be paired with a corporate organisation’s training programme to emphasise philanthropic causes that are close to a firm’s heart.
“With the ability for friends, firms, schools and chari-ties to host and customise their own games, we now have more fun competitions throughout the year and most importantly, more money raised for charity,” she adds.
Whether supporting those in real need of help and care, such as the victims of child abuse or the casualties of war, or empowering people from disadvantaged back-grounds to better themselves, the huge sums raised by the hedge fund sector each year continues to make a real difference to many people’s lives.
The contents of these materials may constitute attorney advertising under the regulations of various jurisdictions.
Over half of the world’s top hedge funds rely on our full-service firm to help them chart their next success. Our premier investment management practice on both sides of the Atlantic not only assists fund managers and investors in creating and structuring all types of funds — we also assist them with all aspects of their businesses, including regulatory and compliance issues, tax matters, litigation and transactions.
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Kimberly Bradshaw, managing director of Buzzacott ’s HR consultancy, talks to HFMWeek about the recent results from research by the fi rm on the impact of auto-enrolment in the industry
THE AUTO-ENROLMENT CHALLENGE
Auto-enrolment legislation helps address the pension gap in an ageing population and ensures that all employees are provided for in their later years, to some extent. All em-ployers have to introduce auto-enrolment by 2017, irrespective of size or structure.
Some are embracing it and using it as the opportunity to focus on a number of positive changes, others are putt ing it into place kicking and screaming.
As it is now just over a year since the legislation came into force, the employee solutions team at Buzzacott com-missioned some unique research comparing the reality of those who had already been through auto-enrolment with the expectations of those who are yet to do so. Th e results were quite unexpected.
KEY FINDINGS:
VIEWS ON PENSIONS AS A BENEFITPensions, benefi ts and employee engagement are rapidly moving up the agenda for organisations across the UK. Almost two-thirds (64%) of employers agreed that auto-enrolment has a positive benefi t to society as it encourages employees to save more for retirement and brings impor-tant decisions about pensions to the fore. Th ree-quarters of the organisations interviewed recognised that having benefi ts in place is important for encouraging employee engagement. A further 76% said a pension scheme is an important element of overall employee benefi ts packages. Being able to att ract and retain a loyal, satisfi ed and en-gaged workforce is critical for any organisation to face the opportunities and challenges ahead.
CONFUSION ABOUT IMPLEMENTATIONIn spite of this, the research revealed confusion among em-ployers about what is required of them to ensure compli-
ance with auto-enrolment regulation. Th e research found that although auto-enrolment has generally been well-re-ceived, 40% of organisations not yet past staging date say auto-enrolment is the biggest challenge their organisation will face over the coming years.
PLAN WELL AHEADWhen asked to pass on a piece of advice to organisations that have yet to begin planning, the more experienced ex-ecutives in our research repeatedly mentioned the impor-tance of planning and having a realistic implementation timetable. One in six (17%) organisations that have al-ready reached their staging date said they would have start-ed planning much earlier if they were to have their time over. A third (34%) said auto-enrolment took more time to implement than expected. It is a concern, therefore, that 43% of organisations said they plan to allow less than six months, an insuffi cient length of time to plan, implement and communicate all the changes required.
REVIEW YOUR EXISTING PROVISIONAs part of the planning process, it is also vital to review the existing pension provision. Organisations with an exist-ing pension scheme need to make sure that it qualifi es for auto-enrolment. Many existing pensions are not compli-ant and providers are very busy, so plan well in advance to fi nd out what you need to know in order to make the right decisions.
THE COST TO YOUR ORGANISATIONTh e research showed that organisations tend to underesti-mate the fi nancial investment required to implement auto-enrolment. Th e costs associated with implementation are, on average, a third higher for organisations that have yet to implement auto-enrolment than for organisations that have already reached their staging date (£332 vs £107). Furthermore, the research showed that opt-out rates are actually much lower than organisations anticipated; mean-ing cost to the business is higher.
COMMUNICATE AND ENGAGETh e success of auto-enrolment, just like any other wide-spread change impacting employees, also depends on how well it is communicated. Consultation with staff has been essential and has been used by many organisations as a means of employee engagement, as well as an opportunity to review HR.
Lessons learned from those who have gone through the process are:
Auto-enrolment need not be a headache, just plan well and don’t underestimate the workload required
Don’t miss out on the opportunity to use auto-enrol-ment to review wider employment engagement poli-cies
Seek additional support from external advisers to give an objective view on how best to approach im-plementation when required.
Approach auto-enrolment like any other organisa-tional change, have a realistic project plan and strong time management
Eff ective communication with employees is a critical success factor
Support and training from external advisors is also benefi cial for a smooth planning and implementation process.
Kimberly Bradshaw joined Buzzacott in 2013 as managing director of its HR consultancy. She is a fellow of both the RSA and the ILM and a member of the Association of Coach-ing. Bradshaw is also one of the few people to have researched the impact of non-verbal communica-tion in leaders for her MSc thesis.
EFFECTIVE COMMUNICATION WITH EMPLOYEES IS A CRITICAL SUCCESS FACTOR
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In the past two years, hackers have penetrated a number of hedge funds, according to Th e New York Times. To what degree is unclear and, regret-tably, it’s not surprising, as hedge funds are ideal targets for hackers. Th ese enterprises represent billions of dollars and they all too oft en have inad-
equate security to protect their assets. As experts note, hedge funds have spent, individually,
many thousands of dollars to take their operations online and to automate them. However, they haven’t suffi ciently invested in anti-hacking and other security technologies, or in the proper training of staff in best practices that sup-port cyber security.
We can easily imagine how the cost of being hacked and losing data would be catastrophic to a hedge fund manag-er. A successful network penetration could mean the loss of reputation and clients, as well as offi cial sanction and lawsuits. Despite the enormous risks, many in the business tend to think all is well as long as someone else is hacked, and not oneself.
However, you can safely assume that aft er information is created and out of your hands, it will live forever. It will exist in some version, and not necessarily catalogued or protected. So how are you to protect your client informa-tion – to say nothing of your intellectual property?
BETWEEN THE NSA AND HACKERSFirst, some background. Increasing amounts of data must be moved around in the cloud, as well as in controlled and secured corporate networks. To remain competitive, fund managers (just like similar professionals in other indus-tries), have a growing number of audiences to communi-cate with for marketing and collaboration, or for regula-tory purposes.
So to begin, you should consider where you might be facing exposure. Potentially sensitive data types include:
Your clients’ IDs, social security numbers, and bank and custodial account informationYour ‘secret sauce’ – the investment strategy data that makes you successful
Th e recipients of the data sent include: administrators, prospects and clients, state or federal regulators, vendors and colleagues. Th ey are oft en geographically distributed and there is no way for you to know the relative strength of each network and server that will house the data.
With the proliferation of shared information and its wider distribution, the risk of their exposure increases. We never know who is sniffi ng at it; as indicated by the revela-tions about offi cial surveillance from Edward Snowden of the National Security Agency.
For retailers, as well as for Wall Street and beyond, hacking is a runaway problem. As the Washington Post re-ported last spring, the federal government notifi ed 3,000 businesses they’d been hacked in 2013. Each week there seems to be another announcement of a major penetra-tion – to cite one of the bigger ones, we need only name Target Corp, which lost records on 40 million payment cards. Subsequently, that amount was exceeded by Th e Home Depot Inc, which possibly had 56 million records compromised.
Network hacks are occurring constantly, and if any-thing, the problem of cyber-theft is underestimated.
THE CONSEQUENCES OF BREACHESAs we mentioned earlier, a hack would most likely result in the loss of clients and the ruination of the business. To-day, it’s reasonable to assume existing and potential clients will begin to demand a baseline of hardened security. Only then will they begin entrusting their assets and their pri-vate information to hedge funds. Th e increased frequency of operational due diligence procedures by sophisticated investors means security and related safeguards will be under review.
THE GOVERNMENT IS TAKING A HARDER LINEBreaches are becoming less and less of a private matt er. Th e Securities and Exchange Commission is pushing for more disclosure of data breaches. In fact, the agency is reportedly investigating multiple companies that were hacked, to fi nd out if they had adequately guarded their data. As part of its investment adviser examination pro-gram, the SEC has promised it will conduct a review on the policies and safeguards asset managers have in place, to mitigate the risks of cyber-att acks.
Some areas where hedge funds are, or will be, reporting about to the government include:
Form ADV basic fi rm and fund informationForm PF portfolio informationAIFMD Annex IV reporting for EU member states with detailed portfolio information (scheduled 2015)
HEDGE FUND MANAGERS DON’T KNOW HOW TO RESPOND AND PREPAREAs hedge funds’ assets have swelled, many managers’ operations and infrastructures are still playing catch-up. Hackers know this and have devised a number of targeted methods designed to access and capture a fi rm’s most sen-sitive data.
Th ey att ack by: Hacking a broker’s account to steal user names and passwords, and then trade securities using the vic-tim’s IDDenial-of-service assaults (DoS att acks)Using ransomware to lock down data until a bribe is paid
Securing IT infrastructure is now a requirement, not an option. Managers must double-down and commit more resources and focus to data security. Making this task more complex is the fact that, frequently, IT operations
Marc Songini, of Intralinks, talks to HFMWeek about the growing need for hedge fund managers to acknowledge the severe risks posed by cyber-attacks
CYBER SECURITY
Marc Songini has worked in the informa-tion technology field for many years as a journalist, analyst and marketing communica-tions specialist. During his 10 years with International Data Group (IDG), Songini wrote for Network World and Computerworld, both award-winning magazines. Currently, he is lead writer for corporate communica-tions at Intralinks.
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are outsourced, so managers must be ready to demand documentation from their service providers.
HOW TO PREPARECyber security is now of growing concern for many hedge fund firms. You don’t want to be left behind, given that hardened security will most likely prove to be a competi-tive advantage. Regulators and clients are going to press managers to offer the most ironclad assurances that their data is as secure as reasonably possible. We recommend you start by changing your mindset.
Remember, success and growth aren’t just matters of managing investments. They are also about prioritising your IT, operations and security. You need to begin exam-ining your approach and to collaborate more closely with your IT personnel or service provider to make security as strong as possible.
A useful way to look at cyber security is to identify po-tential risks in your networks and data storage systems in advance. Some checklist specifics:
Educate yourself. Learn about the importance of se-curity, data privacy and compliance
Do a deep risk assessment dive. It’s impossible to forecast and mitigate data privacy risks without knowing all of the technologies your organisation employs
Keep track of your assets. Organisations should keep detailed logs of all activity around their data.
Ask yourself: are the basics in place, such as antivirus or monitoring applications? Besides the basics, you also need to see where else you must make improve-ments
Evaluate your collaboration assets. Make sure you use the most suitable and secure (and easily adopt-able) work apps.
Consider vulnerabilities that might arise during re-mote customer access sessions, or when there is a fund transfer request
Ask yourself: does my current vendor or home-grown system come up lacking?
Proactively learn how to detect suspicious network activity
Review how you interact remotely with third-parties Define best practices for security and confidential-
ity and establish a procedure for internal governance that ensures compliance to these guidelines
Train your employees in these best practices, such as when and how an employee accesses or shares a customer record
Think about protecting information, both at rest and in transit. High-level advanced encryption standard (AES) protection is desirable
Shop for the right tools Pick your partner wisely: Working with responsible
and knowledgeable vendors can ease your burden – a poor partner can make the load much heavier
Get down to the document level. Any vendor worth its salt must provide centralised visibility and com-pliance monitoring capabilities – for the lifetime of every document you own.
TAKE YOUR DATA AND APPS SERIOUSLYRemember, as a steward of investor capital, safeguarding your clients’ information is your responsibility; the burden is on you. Start now.
CYBER SECURITY IS NOW OF GROWING CONCERN FOR MANY HEDGE FUND FIRMS. YOU DON’T WANT TO BE LEFT BEHIND, GIVEN THAT HARDENED SECURITY WILL MOST LIKELY PROVE TO BE A COMPETITIVE ADVANTAGE
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HFMWeek (HFM): 2014 has been an eventful year for hedge fund managers in terms of regulatory develop-ments. In which fi nancial centre have you encountered the most challenges and how have you overcome them?Colin MacKay (CM): Interesting question, can I say all of them? We have seen a wide array of legislative and regula-tory challenges with the global impact of Fatca, following not only its coming into eff ect but also the progression of IGAs and implementing legislation. Changes in the US have included new rules or clarifi cation/guidance from CFTC and SEC, as well as revised directions to auditors from the PCAOB which will likely impact audit prepara-tion and completion. At the same time, AIFMD has rum-bled on, aff ecting a growing proportion of jurisdictions, managers, funds and investments. We have also seen in-creased regulatory overlay in Cayman with the introduc-tion of the Directors Registration and Licensing Regime. Every one of these developments impacts the environment in which hedge funds operate and adds to the existing bur-den of regulatory compliance, information gathering and reporting, which impacts managers and their funds. How have we overcome them? We have continued to work with our clients to consider the issues, construct or support relevant solutions and put in place the right control and reporting mechanisms to meet or mitigate each challenge.
HFM: How have new regulations, such as the AIFMD, changed the way administrators interact with the hedge fund sector?CM: I see two distinct components; the fi rst is the in-creasing advisory relationship between administrator and manager, where the broader industry exposure of our administration business allows us to provide an insight into options which may not be immediately apparent to a manager trying to address particular issues in a vacuum. Th e second is the manager/client-driven expansion of out-sourced back and middle offi ce services off ered by admin-istrators. At Elian, we have seen within our private equity business in particular a growing demand for additional regulatory and operational controls and support services to new and existing managers and funds to help meet the increasing regulatory and statutory obligations.
HFM: Are you seeing any new trends from the hedge fund clients you are dealing with in terms of the juris-dictions being used and type of strategies being off ered?CM: Domiciling and structuring remains consistent with the traditional onshore/off shore, Delaware/Cayman
model, which remains fi t for purpose and well understood by managers and investors alike. Investment strategy de-velopment has followed a fairly predictable path in terms of trying to identify new areas of volatility where gains can be achieved. Th ose strategies do not appear to be revolu-tionary, rather evolutionary and very much a refi nement of investment strategies that we have seen in action for a number of years. While capital and gains are available, my impression is that no one is yet prepared to admit that the global economy is fundamentally healthy again, and cer-tainly not back to pre-crash opportunities.
HFM: How do you think the hedge fund admin sector will change and develop over the next fi ve years?CM: Consolidation. Th e increased regulatory, data gather-ing, storing and reporting obligations on funds aff ect admin-istrators every bit as much as they do managers and so the need to develop and maintain current operating and data management systems to be able to obtain, process, store securely and report on the required data in an effi cient way to meet regulatory reporting requirements is likely to drive consolidation in the mid-market sector in particular.
HFM: What do you think the current outlook is for new hedge fund activity?CM: It appears strong, certainly stronger than we have seen for a few years. Th ere is capital available and while the number of start-up managers is nowhere near the heydays of 2006/7, we are starting to see more new market en-trants. Th ere is a generational move that is primed to take place and the timing will be driven by the confi dence of the individuals concerned and the institutional investors’ willingness to back their new ideas and approaches.
HFM: How can hedge funds deal with the ongoing pressures to keep business costs to a minimum?CM: With the regulatory burden ever growing, the tipping point comes when the cost of compliance adversely aff ects the net return for investors. If the alternatives industry cannot address the regulatory costs while still delivering enhanced returns, there is a much bigger problem for us all. As I mentioned earlier, the manager/client drive to-wards enhanced back and middle offi ce services from ad-ministrators, to leverage off their systems and processes, is certainly the option that we are seeing. Strategic outsourc-ing remains the practical option and as solutions are devel-oped for industry-wide issues, the cost can be controlled to a much greater extent than for a manager trying to wear too many hats.
HFM: Looking ahead, are there any other future regu-latory developments that are causing you concern?CM: Unfortunately, I don’t think we are over the Fatca hump yet. Th e geopolitical drive towards a common re-porting standard off ers a solution of sorts, but the reality of the modern world is that CRS is viewed as a standard until it comes to passing domestic enforcement legislation when every jurisdiction wants to att ach its own emphasis or bolt on additional information requirements. From an operational perspective, a genuine CRS would be prefer-able – one standard of data gathering and reporting across multiple jurisdictions, which is easy to understand and easy to implement. However, the danger is that jurisdic-tional drift will make it harder than it should or could be. How we anticipate that and provide a solution to clients is what keeps me awake at the moment.
Colin MacKay, group director of Elian, speaks to HFMWEEK about the ongoing Fatca fallout and the increasing need for admin consolidation
SIGNS OF LIFE
Colin MacKay is group director of Elian with global responsibil-ity for fund services. He joined the group in 2003 becoming a director in 2007. A qualified solicitor, he is a member of the Cayman Islands Law So-ciety, the Cayman Islands Directors Association and is deputy chairman of AIMA, Cayman.
FEATURE ASIA SERVICES AWARDS 2014
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H E D G E F U N DS E R V I C E S
AWA R D S
ASIA 2014
Last month’s HFMWeek Asia Service Awards recognised the providers and vendors who were providing top-notch levels of service to hedge fund managers in the region. Here are all the award winners in each of our service categories, who were presented with their gongs at a ceremony held at the Conrad Hotel in Hong Kong. Congratulations to everyone featured on this page and to all the firms that were nominated for these prestigious awards.
BEST ADMINISTRATORUNDER $30BN – SINGLE MANAGER
BEST ADMINISTRATOROVER $30BN – FUND OFHEDGE FUNDS
BEST ADMINISTRATOR UNDER $30BN – OVERALL
BEST ADMINISTRATORMIDDLE-OFFICE SERVICES
BEST ADMINISTRATORUNDER $30BN – FUND OF HEDGE FUNDS
BEST ADMINISTRATOROVER $30BN – OVERALL
BEST ADMINISTRATOROVER $30BN – SINGLEMANAGER
BEST ADMINISTRATORSMALL AND START-UPFIRMS
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BEST AUDIT SERVICES
BEST ADVISORY FIRM- CLIENT SERVICE
BEST ONSHORE LAW FIRM
BEST PRIME BROKER- INNOVATION
BEST TECHNOLOGY PROVIDER - OVERALL
BEST HEDGE FUND PLATFORM
BEST ONSHORE LAW FIRM - CLIENT SERVICE
BEST PRIME BROKER - CONSULTING SERVICES
BEST TAX ADVISORY
BEST ADVISORY FIRM- REGULATION AND COMPLIANCE
BEST OFFSHORE LAW FIRM - CLIENT SERVICE
BEST PRIME BROKER- CAPITAL INTRODUCTION
BEST TECHNOLOGYPROVIDER - INNVOATION
BEST OFFSHORE LAW FIRM
BEST PRIME BROKERTECHNOLOGY
BEST OVERALL PRIMEBROKER
HFM FOCUS DEPTH OF EXPERTISE AND KNOWLEDGE
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If you root for the NY Mets and care enough to lis-ten to their radio broadcasts (admitt edly, a small pool), the glass is half full and half empty. Half empty because the Mets have been underachiev-ers since 2006, and even more unforgivably, gen-erally boring; half full because Howie Rose and
Josh Lewin are among the best announcers in baseball. Aft er each game, Josh Lewin has a segment, ‘What Did We Learn?’ In the spirit of Josh’s post-mortems, let’s see what we have learned recently.
Conference agendas, media posts and client due dili-gence discussions oft en represent a barometer of the con-cerns that market participants face. Consistently, recent hedge fund agendas, posts and discussions have coalesced around the following issues:
FatcaManagement feesTransparencyODD (Operational Due Diligence)Valuation and compliance
For this article, we leave the Fatca and management fee discussions to others, but the other three issues are a regu-lar concern we see and deal with. Empire has the good for-tune to work with some of the top hedge funds and most astute alternative investment managers in the industry. As a result, we interact with and learn from some of the brightest people focusing on these issues.
Market participants, investors and regulatory authori-ties want to be sure that ‘what you see is what you get’, whether in marketing materials, compensation, trading for
one’s own account, client asset protection or valuation. In-vestors want to know that reported asset values equate to asset fair values. Transparency, both internally and exter-nally, is becoming more important as regulation continues to creep into more segments of the industry. Large inves-tors are calling for transparency as a requirement for them to invest (a change for private equity funds in particular). Th is is critical not only for regulators and investors, but for performance assessment, benchmarking, and to ensure that asset managers are appropriately compensated based upon actual, not aspirational, returns.
We have been the subject of ODD reviews by funds of funds interested in the performance of their investee hedge funds and other clients. We have discussed valua-tion philosophy, market expectations and methodologies with our clients. We have also heard from countless mar-ket participants about transparency. What role can third-party valuation fi rms play in providing transparency?
Generally, valuation issues surrounding level one and level two assets are straightforward. Valuation issues be-come more complex when dealing with level three assets, where there is no liquid market for a security and no (or an insuffi cient pool of) secondary market trades or broker quotes. Independent, third-party valuations or confi rma-tions can provide the sought-aft er assurance and transpar-ency to investors and regulators. Th is work allows investors to see, on a much more granular level, how asset values are arrived at, in some cases, or closely reviewed in others.
Illiquid securities present special challenges to the as-sessor of fair value. Access to information, particularly on co-investment positions, unobservable inputs, complex promote arrangements and tight fi nancial reporting dead-lines all create challenges in assessing the fair value of level three investments on a timely basis.
What practices can the valuator use to mitigate these valuation and reporting challenges? First, commit to working closely with the client fund to understand the un-derlying rationale for what made the investment att ractive for acquisition. Read the investment memoranda, both in-itial documents and subsequently modifi ed ones. Test the fund’s underlying fi nancial investment model for the asset. Speak directly with asset managers and servicers. Com-pare model assumptions with market participant inputs and outputs. Track ongoing, real-time performance with prior forecasts. We also like post-transaction backtesting of model assumption inputs and concluded values or out-
EMPIRE HAS THE GOOD FORTUNE TO WORK WITH SOME OF THE TOP HEDGE FUNDS AND MOST ASTUTE ALTERNATIVE INVESTMENT MANAGERS IN THE INDUSTRY. AS A RESULT, WE INTERACT WITH AND LEARN FROM SOME OF THE BRIGHTEST PEOPLE FOCUSING ON THESE ISSUES
”
BACKTESTING IS AN EXCELLENT WAY TO SEE WHETHER THE VALUE DRIVERS IN THE FUND’S MODELS (CASH FLOWS, EXIT MULTIPLES, DISCOUNT RATES, CAP RATES) MATCH THE ASSUMPTIONS AND VALUE DETERMINANTS OF RELEVANT MARKET PARTICIPANTS
”
Mark Shayne, of Empire Valuation, speaks to HFMWeek about the key issues being discussed by industry leaders and the challenges these bring to valuation fi rms
WHAT DID WE LEARN?
Mark Shayne is a managing director with Empire Valuation Consult-ants, LLC. He has over 25 years of valuation experi-ence with hedge funds, alternative investments and private equity/debit fair value measurement. Shayne received a BS Degree cum Laude from Wharton and MBA with Distinction from NYU.
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puts. Backtesting is an excellent way to see whether the value drivers in the fund’s models (cash flows, exit mul-tiples, discount rates, cap rates) match the assumptions and value determinants of relevant market participants. Finally, remain acutely aware of financial filing deadlines, fund administrator reporting commitments and audit re-view timetables.
Compliance is at the forefront of a manager’s concerns, and rightly so, especially for the valuation function. Nev-ertheless, one outgrowth of the implementation of the valuation process could be the evolution of the third-party valuation agent from fulfilling only a compliance/regula-tory function to assisting fund management as value-add-ed experts, whose views shed (additional) light on how markets might view hard-to-value investments. Funds are paying third-party valuation firms to confirm or value their level three investments anyway, so putting them to work in other ways makes sense.
Fund management is always looking for an incremen-tal edge to boost performance and investor relations. Moreover, improving internal conformity in the valua-
tion review and reporting process across funds eases re-turn comparisons and administrative burdens. It makes sense to take advantage of the breadth of experience that the third-party valuator offers by working with multiple funds and fund manager styles, structures and asset class-es, to bring potentially new best practices into one’s own fund, or help expand these practices consistently across funds.
FUNDS ARE PAYING THIRD-PARTY VALUATION FIRMS TO CONFIRM OR VALUE THEIR LEVEL THREE INVESTMENTS ANYWAY, SO PUTTING THEM TO WORK IN OTHER WAYS MAKES SENSE
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SERVICES DIRECTORY
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To promote your company, email: directory@hfmweek .com or call UK +44 (0)20 7832 6615 // US +1 (212) 268 4919
FUN
D AD
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ISTR
ATO
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Rod White, Director, Bermuda and North America // [email protected], Alan McKenna, Director, Europe // [email protected], Irfaan Hossany, Director, Mauritius and Africa// [email protected], Liam McHugh, Director, Asia // [email protected]
Equinoxe is a premium boutique service provider founded in 2007 by experienced hedge fund administration professionals. Headquartered in Bermuda, with operational offices in Bermuda, Ireland, US, Mauritius, Malta and Singapore, we are a full service alternative investment fund administration organization offer-ing both traditional hedge fund administration and middle office outsource products. With institutional technology, institutional procedures, including a SOC 1 report across all offices, the 150+ funds under administration experience ultimate client service via a bespoke operating model tailored to each clients needs.
Thalius Hecksher, Global Managing Director of Business Development // T:+1 (786) 8771923 // [email protected] Hughes, CEO and Founder / T:+44 (0) 778 0997609 // [email protected] Fund Services was established in 2003, and is now one of the world’s largest independent fund administration companies with 34 offices and $26bn AUA. The Apex Global Network is at the heart of the Company’s strategy of being located alongside its clients providing the highest levels of personalized fund services based on four core pillars: Fund Administration, Fund Launch Solutions, Financial Outsourcing and Technologies, providing a full suite of services for our clients. Apex is unique in its ability to Reach Globally, Service Locally and provide best practice cross-jurisdictional solutions enabling a straight through process with complete integration.
Canover Watson, Managing Director – Admiral based in Cayman // T: +1 345 949 0704 // [email protected], Ted Jasinski, General Manager – Admiral based in Virginia // T: +1 804 578 4540 // [email protected] // www.admiraladmin.com
Admiral Administration is a specialist hedge fund administrator founded in 1996. Admiral is part of the Maitland Group, a global institutional provider of fund administration and multi-jurisdictional legal, tax, fiduciary and investment advisory services. The group has US$200 billion under administration and 700+ employees servicing clients from 13 offices across 12 countries. Whether your fund trades equities, options, futures, bonds, bank debt, or complex derivatives, Admiral has an efficient solution to account for the security and customized reporting to match your needs.
Mark Catalano, Head of Business Development // 17310 Red Hill Ave, Suite 135, Irvine, CA 92614 // T: +1 760 889 1225 // [email protected] // April Spencer, Vice President // 3440 Torringdon Way, Suite 205, Chartlotte, NC 28277 // T: +1 980 265 2367 // [email protected] // Danique Sprock, Managing Director // Ara Hill Buildiing, Pletterijweg Oost 1, Willemstad, Curacao // T: (599-9) 845-3286 // [email protected] Fund Services (“ATLAS”) provides complete fund service solutions. Atlas is a privately held, fully licensed, recognised global fund services provider, de-livering tailored hedge fund administration solutions to alternative investment funds including private equity, real estate funds, venture capital funds, hedge funds, and managed accounts. ATLAS is the synergistic partner and preferred incubator of one the world’s largest fund administrators, delivering premium fund service solutions to investment managers located in the United States, Latin America, Brazil, Europe, and Asia, and servicing US onshore funds, and funds in offshore jurisdictions such as the Cayman Islands, the BVI, and Bermuda. The firm has regional offices in Charlotte, North Carolina, Curacao, and soon Malta.
Gerben Oldekamp // T: +31 (0)334673898 // [email protected] // www.circlepartners.com // Circle Partners, Utrechtseweg 31D, 3811 NA Amersfoort, The Netherlands.
Circle Partners is a financial services organisation specialised in rendering accounting and administration, shareholder and organisational services to investment funds established in a different number of jurisdictions and with diverse investment strategies. Our goal is to assist asset managers in building their invest-ment fund and enabling them to concentrate on the asset management business through a process of outsourcing virtually all back-office functions to Circle Partners. Special care and attention is given to accurate and swift communication with the fund manager and shareholders to enhance client satisfaction and confidence and to assist in creating a sound reputation for the fund.
Andrew Dougherty, Managing Director and Head of Alternative and Institutional Solutions - Securities Services North America // T: +1 212 841 2843 BNP Paribas is a leading global provider of securities services that delivers integrated solutions for all participants in the investment cycle: sell side, buy side and issuers. With a local presence in 32 countries across 5 continents and a global coverage of over 100 markets, we work by our clients' side around the world, offering a one-stop shop for all asset classes, both onshore and offshore. In the alternative investment industry, BNP Paribas is well-regarded for the level of thought leadership and service excellence expected from one of the world’s largest and strongest banking groups*. Thanks to our continual investment in technology, people, and product development, we deliver innovative, operationally efficient solutions that operate across the entire value chain for single hedge funds, funds of hedge funds, and separately managed accounts. *Rated AA- by Standard and Poor's.
CACEIS // Paddy Walsh, Business Development Director – UK & Ireland // UK Tel: + 44 20 7214 5053 // email: [email protected] //www.caceis.com CACEIS is an asset servicing banking group dedicated to institutional and corporate clients. Through offices across Europe, North America and Asia, CACEIS offers a broad range of services covering depositary and custody, fund administration, alternative investment servicing, middle-office outsourcing, derivatives clearing, forex, securities lending, and fund distribution support. CACEIS is a leading player in the alternative investment servicing market, and with assets under custody of €2.3 trillion and assets under administration of €1.3 trillion, CACEIS is one of the leading global asset servicing providers and the largest depositary and premier fund administrator in Europe (figures to 31 December 2013).
Marina Lewin, Head of Global Business Development, Asset Servicing // T: +1 212 815 6973 // [email protected] Mannion, Head of EMEA Business Development, Alternative Investment Services // T: +353 1 900 4547 // [email protected] Mellon is a global investments company dedicated to helping its clients manage and service their financial assets throughout the investment lifecycle. Whether providing financial services for institutions, corporations or individual investors, BNY Mellon delivers informed investment management and invest-ment services in 35 countries and more than 100 markets. BNY Mellon can act as a single point of contact for clients looking to create, trade, hold, manage, service, distribute or restructure investments. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). Additional information is available on www.bnymellon.com, or follow us on Twitter @BNYMellon.
Michael Keyrouz // T: +356 2258 9502 // [email protected] Ian Hamiltion // T: +27 21 402 1600 // [email protected] // 276 Fleur-de-Lys Road, Birkirkara, BKR 9067 Malta
IDS Fund Services Malta is part of the IDS Group, the leading African Alternative Investment Administration Group. IDS Malta is regulated by the Malta Financial Services Authority, having opened on the island in April 2010. The company serves funds domiciled in Malta as well as other international domiciles. The company is also affiliated with a number of platforms, providing tailored and inexpensive hosting facilities for start-up and smaller Malta and Cayman-based funds. IDS Group has become a leading fund administrator through listening to its clients and providing tailored solutions and services.
HSBC operates in various jurisdictions through its affiliates, including, but not limited to, HSBC Bank plc who is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, The Hongkong and Shanghai Banking Corporation Limited, HSBC Securities (USA) Inc., member of NYSE, FINRA and SIPC, and HSBC Bank USA, NA.
Issued by HSBC Holdings plc. AC22067
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SERVICES DIRECTORY
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To promote your company, email: directory@hfmweek .com or call UK +44 (0)20 7832 6615 // US +1 (212) 268 4919
Tony Fischer, President // Tel: +1 267-349-8065 // www.umbfs.com
The Alternative Investment Services division of UMB Fund Services offers a complete back-offi ce solution for hedge funds, funds of funds, registered hedge funds and private equity funds. Our full-service lineup includes product formation assistance, fund administration and accounting, investor accounting and reporting, tax preparation and reporting, and custody (through our affi liate, UMB Bank, n.a.). We are known for high-touch service, leading-edge technology, and the stability of a highly capitalized parent that’s been around for 100+ years. Ask us about Registered Fund Solutions, the industry’s fi rst turnkey solution for launching and servicing a registered hedge fund.
Concetta Mastrangelo, Fund Services Business Development, USA // T: +1 212 719 2178 // [email protected] James Gilbert, Fund Services Business Development & CRM, Cayman Islands // T: +1 345 914 6150 // [email protected]
UBS's Fund Services business is a global fund administrator providing professional services for traditional investment funds, managed accounts, hedge funds, private equity funds and other alternative structures. With service centers located in Canada, Cayman Islands, Ireland, Jersey, Luxembourg, Singapore, Switzerland and the United States together with business development and client service offi ces located in Hong Kong and the United Kingdom, Fund Services is dedicated to providing a comprehensive range of asset services to clients around the globe.For more information, visit www.ubs.com/fundservices
Karine Seguin, Head of Business Development – Europe // T: + 44 (0)207 935 1503 // [email protected] Smith, Head of Business Development – North America // Tel: +1 (404) 364 2068
Trident Fund Services, a division of the Trident Trust Group, provides cost-effective fund representation and administration services across ten jurisdictions in the Caribbean, North America, Europe and Asia. Serving more than 325 funds with AuM exceeding $30bn, managers select us for our independence, pricing based on services performed and not AuM, global footprint, experienced personnel, reliability and responsiveness. We offer clients a more than 30-year track record as a leading provider of administration services to the fi nancial services sector worldwide. Visit us at www.tridentfundservices.com
Punit Satsangi, EMEA Managing Director // [email protected] // T: +44 (0)20 3310 33041 St. Martins Le Grand, London, EC1A 4AS // www.sscglobeop.comSS&C GlobeOp, a division of SS&C Technologies, is an independent top-10 fund administrator for both onshore and offshore hedge funds. Key differentia-tors for our business include our cutting-edge cloud-based services which allow unparalleled transparency and access for investors, regulators and clients alike; our high quality custom service model; our signifi cant staff expertise and propriety ownership of state of the art technology. Our growth and success is driven by high quality service, satisfi ed customers and referrals. SS&C GlobeOp serve over 6,700 funds representing $430bn in AUA ranging from start-up funds to some of the biggest names in the industry.
Ken Somerville // Head of Business Development // [email protected] // T: +353 1 523 8003 // www.quintillion.comJoan Kehoe // Chief Executive Offi cer // [email protected] // T: +353 1 523 8001 // www.quintillion.com
Quintillion is a specialist Dublin based provider of fund administration to alternative investment funds. We provide back and middle offi ce services to a diverse range of fund structures, strategies and domiciles supported by class leading technologies and our expert operations group. Following our start-up or conversion process, funds are serviced by client-centric investor services and accounting teams delivering an accurate, timely and transparent administration solution all within strict deadlines.
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Robin Bedford, CEO // [email protected] // (441) 234-0004 // Stephen Giannone, President & Head of Sales // [email protected] // (312) 374-1614 // Greg Knapp, Business Development // [email protected] // (415) 762-8749 // Jorge Hendrickson, Business Development // [email protected] // (646) 439-7004
Opus Fund Services is an award winning independent fund administration fi rm. Within a SSAE16 approved process, Opus uses unique technology and fl at fee pricing to provide automated, integrated middle & back offi ce administration services to domestic and offshore hedge fund and alternative investment vehicles. The ONE platform has received widespread industry recognition including “Best Overall Fund Administrator with AuA < $30bn” by HFMWeek, and Top-Ranked Fund Administra-tor by Global Custodian for an unprecedented fi ve consecutive years. For more information on Opus Fund Services, please visit www.opusfundservices.com.
Steve Slessor, Managing Director, Global Head of Sales // T: +1 519 748 6028 x140 // [email protected] Blair Henderson, Managing Director, Business Development // T: +44 0 203 195 0336 // [email protected]
Mitsubishi UFJ Fund Services is part of the fi fth largest bank in the world with $2.4tn in assets and over 140,000 employees worldwide. Mitsubishi UFJ Fund Services provides a multi product offering that suits clients’ specifi c needs – leveraging the fi nancial and intellectual capital of Mitsubishi UFJ Financial Group. From fund administration, custody, FX hedging, trust, depositary to securities lending and other banking services, Mitsubishi UFJ Fund Services partners with clients throughout the trade lifecycle. Mitsubishi UFJ Fund Services has $165bn in AuA, servicing 1000 funds globally.
Asia: Gillian Chan // T: +852 2295 2968 // gillian.chan@orangefi eld.comEurope: Sean Murray // T: +352 (49) 6767 4417 // sean.murray@orangefi eld.com www.orangefi eld.com
For 40 years across our 25 global locations, Orangefi eld has been providing exceptional alternative investment fund services. Our full suite of services includes administration, set-ups and back / middle offi ce outsourcing as well as corporate, director and trust services along with regulatory compliance. Orangefi eld employs an expert consultative approach to create solutions unique to the client and believes that investing in exceptional technology to meet higher stan-dards allows our clients to succeed. We follow this principle of mutual growth throughout the entire fund life cycle.
Bob Kern T:+1 800 300 3863 // [email protected] // 615 East Michigan St. Milwaukee, WI 53202 // www.usbfs.comSince 1969, clients have come to rely on US Bancorp Fund Services for innovative service solutions and industry expertise. US Bancorp Fund Services has built its reputation on offering the broadest range of top-quality mutual fund and alternative investment product services. The expertise of US Bancorp Fund Services extends from mutual funds to a wide variety of alternative investment product services, including hedge funds, funds of funds, limited partnerships, offshore funds, private equity funds and separately managed accounts. With specialist expertise in both single manager and fund of hedge fund administra-tion, services can be provided for both onshore and offshore funds. Through our comprehensive range of services and products, leading edge technology platforms and superior client service, we work in partnership to offer the solutions you need.
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LMAX Exchange LMAX Exchange, Yellow Building, 1A Nicholas Road, London, W11 4AN, Institutional Sales // T: +44 20 3192 2682 // F: +44 20 3192 2572 // [email protected]
The award-winning LMAX Exchange is the fi rst MTF for FX authorised and regulated by the FCA – delivering the benefi ts of limit-order driven, exchange quality execution, pre and post-trade transparency, 4ms trade execution speeds in 66 FX pairs and no ‘last look’ to the institutional FX market – all via multiple connectivity options: FIX 4.4, Java and .Net APIs, MT4/5 bridges. LMAX Exchange – a unique vision for global FX.LMAX Limited operates a multilateral trading facility. Authorised and regulated by the FCA – registered no. 509778
International Management Services Ltd. Geoff Ruddick, Head of Funds // T: +1 (345) 814 2872 // Gary Butler, Managing Director // T: +1 (345) 814 2874 // [email protected] // www.ims.ky
International Management Services Ltd was one of the fi rst in Cayman to specialise in providing professional independent directors to the fund industry. Today, we are a leading provider of corporate governance and associated services to the fund industry. All of our fi duciaries are registered with the Cayman Islands Monetary Authority as ‘Professional Directors’. Our team has over 200 years of collective experience in the fund industry and provides services to some of the largest global hedge fund organizations. We are one of the largest and longest standing truly independent providers of such services.
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[email protected] Buzzacott LLP // 130 Wood Street, London, EC2V 6DL // [email protected] // www.buzzacott.co.uk
Buzzacott is a London based accountancy fi rm with a specialist team offering audit, accounting and taxation services to the hedge fund sector. Buzzacott is a market leader for the provision of start-up, HR, FCA reporting and business support services to UK and US managers and their stakeholders. Buzzacott's Expatriate Tax Team has over 60 tax advisers with UK and US tax qualifi cations and can provide the added compliance and advisory tax services to clients with US shareholders or employees.
Michelle Carroll, partner, Asset Management & Funds // T: +44 (0)20 7893 2711 // [email protected] // Neil Griggs, partner, Hedge Funds // T: +44 (0)20 7893 3775 // [email protected] // BDO LLP // 55 Baker Street, London // T: +44 (0)20 7486 5888 // www.bdo.uk.com
BDO is the world’s fi fth largest accountancy and professional services fi rm, with nearly 49,000 partners and staff across 119 countries, including all major fi nancial centres. We have a strong reputation as a leading advisor to fi nancial services fi rms with a particular emphasis on the asset management sector. We have a dedicated global team and a multidisciplinary approach combining strategy, regulation, risk, tax, corporate fi nance and IT specialists.
Christian Bekmessian // T: +1 212 891 4062 // [email protected]; Peter Cogan // T: +1 212 891 4047 // [email protected]
EisnerAmper LLP is a premier full-service accounting, tax and administration fi rm with global capabilities. EisnerAmper has led the way in establishing and building a highly trained and dedicated Hedge Fund Group. Our professionals have experience and expertise in the intricacies of the regulatory and tax environment, the valuation of complex fi nancial instruments and the challenges of maintaining strong accounting and investment controls. The professionals of EisnerAmper have a decades-long service record to the fi nancial services industry, giving us an understanding of the problems you face on a daily basis, as well as the ability to provide practical solutions. www.eisneramper.com
Alan D. Alzfan, Partner, Financial Services Practice - North America // T: +1 212-372-1380 // [email protected] Lesser, Financial Services Practice - North America // T: +1 312 634 4604 // [email protected] more than 50 years of experience serving the fi nancial services community in key fi nancial hubs, McGladrey professionals help organizations navigate complex reporting, governance and regulatory issues to achieve their business objectives. Based on the knowledge that comes from serving alterna-tive investment companies, investment advisors, investment partnerships/hedge funds, private equity funds, business development companies, mutual funds, broker-dealers and futures commission merchants, we understand the complex operational, fi nancial reporting and compliance issues facing the industry. We provide industry insight, advice and solutions to fi nancial services organizations across the country and around the world. That’s what you can
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Paul Mifsud, Managing Director // [email protected] // 101 TOWNSQUARE, Ix-Xatt ta’Qui-si-Sana, Sliema SLM 3112T: (+356) 21 33 57 05 // www.sparkasse-bank-malta.com
Sparkasse Bank Malta plc forms part of the Austrian Savings Banks and the Erste Group Bank AG forming part of Austria’s largest banks. From Malta the bank provides private banking and fund custody solutions. As trained private bankers, the bank strives to deliver private, personal and tailored solutions to its fund customers by offering a seamless banking, execution, settlement and custody solution from one account. Fund custody is considered a core service at Sparkasse Bank Malta plc and the bank avoids all potential confl icts by focusing entirely on what it is they are truly hired to do i.e. – safekeeping, record keeping, monitoring and reporting.
Rosie Guest, Brand Development Manager // [email protected] // Robert Kelly, Senior Partner // [email protected] //T: +44 (0)207 529 2305 // 3rd fl oor, 4 Maddox Street, London, W1S 1QPHeadquartered in London, Baronsmead is an independent, specialist risk consultant and broker providing fi nancial risks insurance, guidance and advice to the alternative investment management industry. Baronsmead provides managers and their funds with risk transfer protection from the legal, regulatory, operational and employment risks they face. We have a tried and tested product, and in recent years, have managed and settled around $20m of manager and fund claims in the UK, New York, Cayman Islands and BVI. Hands-on claims management is key, and for this reason we have our own insurance litiga-tion solicitor in-house. At Baronsmead we believe in doing what is right for our clients and maintaining those relationships through a quality service.
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Lockton Financial Risks, The St Botolph Building, 138 Houndsditch, London EC3A 7AGHenry Keville, T: +44 (0)20 7933 2157 // [email protected] is the world’s largest privately owned, independent insurance broker, which means our focus is on our clients and our people rather than external analysts and institutional shareholders. Lockton truly has a global footprint with over 60 offi ces around the world and more than 4500 employees with more than 15,000 clients. Our award winning specialist division focus exclusively on the asset management industry and our clients range from the largest asset management fi rms in the world right down to numerous start up operations with each and every client receiving the very best service; our clients have a combined AUM of US$10trn. Call us to fi nd out why the team have the highest client retention rate of any other broker.
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To promote your company, email: directory@hfmweek .com or call UK +44 (0)20 7832 6615 // US +1 (212) 268 4919
E Phillip Chapple, Executive Director // [email protected] // T: +44 (0) 203 170 8815
KB Associates is a boutique operational consulting fi rm with offi ces in Dublin, London, Luxembourg, Cayman and New York. KB Associates advises managers on operational issues relevant to the establishment and ongoing management of offshore investment funds. Services include tailored hedge fund and investment manager start-up services, preparation for investor due diligence (full review to identify potential issues combined with advice on meeting grow-ing investor due diligence standards) and re-domiciliation advisory services.
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Kevin M. LoPrimo, Managing Director – Head of Hedge Fund Services and Equity Finance // T: +44 (0)20 7399 9461Julian Parker, CEO // T: +44 (0)20 7399 9450
Global Prime Partners Ltd is a prime broker providing a highly personalised specialist service to start up and emerging hedge funds, family offi ces, asset managers and professional traders, often overlooked and underserviced by large fi rms. Our integrated, proprietary technology platform, allows us to provide the right level of integration and reporting to meet each of our client’s needs. We provide start up consulting, trade execution, clearing, custody, margin fi nancing, stock lending and potentially introduction to capital.
Jack D. Seibald, Managing Member, 1010 Franklin Avenue, Suite 303, Garden City, NY 11530 // Tel: +1 (516) 746 5718 // Mob: +1 516 359 7503 // email: [email protected] Capital Markets, LLC offers comprehensive brokerage and related services that provide traditional and alternative investment managers with cus-tomisable and scalable solutions. We were built by former investment managers to serve hedge fund managers, managed account platforms, institutional investors, family offi ces, and registered investment advisers with turnkey solutions designed to free clients to focus on their core competencies. Our offering features world-class custody and clearing options, multi-asset class capabilities, leading execution and order management systems, a seasoned execution desk, a range of fi nancing options, a highly professional operations and customer support team, comprehensive portfolio reporting capabilities, and capital introduction.
Jerry Lees, Chairman, Linear Investments // T:+44 (0) 203 603 9801 // jleeslinearinvestment.com // Sales +44 (0) 203 603 9844 [email protected] // US offi ce: T: +1 (212) 293 1836 // 800 Third Avenue, 39th Floor, New York, NY 10022 // www.linearinvestment.com
Linear Investments provides Mini-Prime brokerage, regulatory incubation and capital introduction services geared towards smaller/mid-size funds. With Linears’ aggregated PB relationships, we can provide attractive pricing for our clients. For Capital introduction, Linear provides investment via its B&L Seeder fund for seed/acceleration capital. In addition, Linear provides outsourced trading through its experienced trading team, encompassing a comprehensive Electronic Execution platform.
Kate Wormald // 103 Wigmore Street, London W1U 1QS // T: +44 (0)20 3693 6085
We are a highly respected specialist consultancy providing legal and regulatory services to hedge funds and investment managers.We provide dynamic and proactive assistance in negotiations of all trading documentation.As specialists we do not have the distractions of a wider portfolio and therefore offer, what we believe is, an unrivalled level of service and understanding in the hedge fund arena. As active participants in the hedge fund industry we are closely involved in key industry developments.We pride ourselves on working in the most commercial and effective ways that best fi t with our client’s strategies and objectives.
Josée Weydert, Managing Partner & Banking and Finance Partner // [email protected] // 2, rue Jean Bertholet, L-1233 Luxem-bourg, Grand Duchy of Luxembourg // T: +352 26 12 29 1 // F: +352 26 68 43 31 // www.nautadutilh.comNautaDutilh is an international law fi rm with offi ces in Amsterdam, Brussels, London, Luxembourg, New York and Rotterdam. With more than 400 lawyers, notaries and tax advisers, NautaDutilh is one of the largest law fi rms in the Benelux region. NautaDutilh Avocats Luxembourg is a full service business law fi rm. It provides high quality legal advice and services in banking & fi nance, corporate, capital markets & securitization, insolvency, tax, investment funds as well as intellectual property and ICT. NautaDutilh Avocats Luxembourg is a recognised player in the Luxembourg legal market. With its 35 lawyers, it serves a wide range of institutional clients, mainly fi nancial institutions, asset managers, large and mid-sized corporates, private equity fi rms, funds sponsors and IT companies.
Henry Bregstein, Global Co-Chair of Financial Services Practice // P: (212) 940-6615 // F: (212) 940-3808 // [email protected] Zinman, Head of Chicago Financial Services Practice // P: (312) 902-5212 // F: (312) 577-4587 // [email protected] advises many of the world’s premier domestic and offshore hedge funds, commodity pools, and other collective investment vehicles. Both fi rst-time and well-established sponsors come to Katten for guidance on the structuring, formation and documentation of hedge funds. We also advise private fund clients in corporate and fi nancing transactions, including leveraged buyouts, minority investments, public and private exit transactions, recapitalizations, restructurings, and fund formation. Katten attorneys help our investor clients optimize the terms of each investment and prioritize their goals within each fund’s unique framework. Our depth of experience representing both sponsors and investors positions us to respond quickly with practical solutions that move deals forward.
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Craig Aronoff // T: +1 (646) 545 3859 // email: [email protected] Robert Morse // T: +1 (646) 545 3860 // email: [email protected]
Victor Securities provides technology-driven brokerage solutions to professional investors including hedge funds, RIAs, CTAs and proprietary trading fi rms. Our clients benefi t from real-time risk management tools, customizable reporting, choice of trading platforms, and a capital introduction team that focuses on facilitating mutually benefi cial relationships between managers and investors.
Rawden Leigh, Marsh FINPRO UK // [email protected] // T: +44 207 357 1209 James S. Obrien, Marsh FINPRO // [email protected] // T: +1 212 345 6432
Marsh is a global leader in insurance broking and risk management. We help clients succeed by defi ning, designing, and delivering innovative industry-specifi c solutions that help them effectively manage risk. We have approximately 27,000 colleagues working together to serve clients in more than 100 countries. Marsh is a wholly owned subsidiary of Marsh & McLennan Companies, a global professional services fi rm offering clients advice and solutions in the areas of risk, strategy, and human capital. Marsh & McLennan Companies has more than 54,000 employees worldwide and approximately $12bn in annual revenue.
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Ras Sipko, COO // T: +1 201 291 7747Koger Inc, 12 Route 17 North Suite 111 Paramus, NJ 07652 // www.kogerusa.com // [email protected] Established in 1994, KOGER® is a leading provider of technology solutions to the fund administration and asset management industries. With offices in the United States, Ireland, Slovakia and Australia, KOGER® provides comprehensive technical support 24 hours a day during business days. KOGER® products include: NTAS®, a shareholder register and transfer agency system, ETASTM, a three-tier web application connecting authorized third-parties with NTAS®, GRID®, a middleware application that facilitates the STP of data in and out of NTAS®, IKAS®, a fund accounting platform, PTAS®, a share-registration system that meets the needs of conventional and alternative pension funds, and PENTAS®, a Private Equity fund administration application.
Capital Support Ltd, 3 Harbour Exchange Square, Docklands, London, E14 9GE // Nigel Brooks, Managing Partner // T:+44 (0)20 7458 1290// [email protected] // Carrie Saunderson, Head of Business Development // T:+44 (0)20 7458 1290 // [email protected] Capital Support is an award winning managed IT services and support provider. The Company specialises in implementing and supporting end-to-end solutions for a large portfolio of global finance sector customers. Based in London, Capital Support has grown steadily since forming in 2002. This successful growth has been fuelled by Capital Support’s commitment to innovation and exceptional customer service. The company ethos is to make IT simple for its customers, replac-ing the burden of high contact IT services with intelligently designed packaged solutions that span from consultancy, design and deployment all the way through to live support. Capital Support’s number one objective is to become the most trusted and respected managed IT services provider in the UK.
Backstop Solutions // US: Patrick Rodgers, VP, Regional Sales Manager & Sales Development // T: +1 312-277-7701 // 233 S. Wacker Dr., Suite 3960, Chicago, IL 60606, USA // EU: Simon Johnson, Managing Director, EMEA // T: +44 (0) 203 764 7090 // 25 Berkeley Square, Berkeley Square, London, W1J 6HN, United KingdomBackstop Solutions Group, LLC is an award-winning provider of innovative software solutions to hedge funds, funds of hedge funds, endowments, foundations, pensions, fund administrators, private equity firms and family offices throughout the United States, Europe and Asia. BSG was founded in 2003 with the goal of creating the industry’s first Software-as-a-Service platform designed to help firms in the alternative investment management industry operate efficiently, invest intelligently and communicate effectively. For more information about Backstop’s product offerings, contact us at: [email protected]
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CYMBA Technologies Ltd, Holland House, 4 Bury Street, London EC3A 5AW // www.cymba-tech.comKarim Ali, partner & co-founder // [email protected] // T: +44 207 220 6561
CYMBA Technologies is a supplier of front office software solutions for the asset management, multi manager and hedge fund sectors across fund manage-ment trading, compliance and operations functions inclusive of 3rd party connectivity with prime brokers, custodians & administrators. The CYMBA Athena IMS provides multi-asset class asset allocation, portfolio management, decision support, order generation, algorithmic trading, real time profit and loss analysis, execution management and pre & post trade compliance functions to some of the largest investment organisations in the world.
Gravitas, 475 Park Avenue South, 32nd Floor, New York, NY 10016 Derek Huyser, Business Development // T: +1 312 509 4079 // [email protected]
Gravitas is a leading provider of co-sourcing solutions for technology, investment operations, risk and research support to the alternative investment and financial services industry. Founded in 1996, the company provides hedge funds, private equity funds and other alternative asset managers with unique and flexible co-sourced offerings for systems integration, technical support, software development, investment operations, risk analytics, investment research support and more. From co-sourcing and advisory through implementation, Gravitas designs creative solutions that give clients the operational freedom to
HedgeGuard Financial Software // Shona Lynch // T: +(44) 2037007320 Established in London and Paris, HedgeGuard Financial Software is the specialist software provider for hedge funds, family offices, asset managers and startups. HedgeGuard®, their front-to-back portfolio management software, is designed to provide accurate performance monitoring of all funds, from one single platform. It smoothes out the whole management chain, from order management, position keeping, risk management, compliance and reporting. Their clients have the possibility to add other components to HedgeGuard®: the middle-office outsourcing service, working as a natural extension of the fund management team, and the mobile office option, offering full database hosting on private cloud and secured remote access. Not just another software provider. Discover more here www.hedgeguard.com
Eze Castle Integration, Dean Hill, Executive Director // +44 (0)207 071 6802 Simon Eyre, Director of Service // +44 (0)207 071 6835Interpark House, 7 Down Street, London, W1J 7AJ, email: www.eci.com Eze Castle Integration is the leading provider of IT solutions and private cloud services to more than 650 alternative investment firms worldwide, including more than 100 firms with $1 billion or more in assets under management. Since 1995, Eze Castle Integration has developed financial vertical-specific IT solutions including infrastructure design and management (both in our Eze Private Cloud and on premise), telecommunications, business continuity planning and disas-ter recovery, archiving, storage, and internet services. These solutions are complemented by a broad service organisation that delivers outsourced IT support, including a 24x7x365 help desk, project and technology management services, consulting services and more. Eze Castle has presence in major financial centres including 8 US offices, a Singapore office, and a Hong Kong office in addition to its London office.
Intralinks, Inc, www.intralinks.com/hedgefund // T: 1-866-INTRALINKS, +44 (0) 20 7549 5200
Intralinks Fundspace™ for hedge fund managers provides best-in-class tools to distribute information to investors securely, efficiently and confidently. From capital-raising to investor reporting, Fundspace provides a single, end-to-end solution to effectively engage with and meet the increasing demands of institutional investors. With over 25,000 endowments, foundations, pensions, consultants, and advisors accessing information from over 500 fund managers, Fundspace is the world’s leading communication platform for alternative investment. For more information, visit www.intralinks.com/hedgefund.
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Bill Prew, CEO // T: 44 (0) 203 691 6327 // [email protected] // www.indosgroup.comPaul Whelan, Head of Depositary Services // T: 353 (53) 924 3861 // [email protected] // www.indosgroup.comINDOS Financial specialises in providing AIFMD Depositary-Lite services to offshore hedge funds. Under the AIFMD EU hedge fund managers marketing offshore HFs to European investors, as well as non-EU managers marketing to certain EU countries, need to comply with new depositary requirements. Managers need to appoint a firm such as INDOS to perform oversight over fund valuation, subscriptions and redemptions, compliance with laws, regulations and investment guidelines as well as cash flow monitoring and record keeping of other assets. INDOS is 100% independent and will work with most leading hedge fund administrators to perform arms-length oversight. INDOS is authorised by the Financial Conduct Authority as an Article 36 Custodian.
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To promote your company, email: directory@hfmweek .com or call UK +44 (0)20 7832 6615 // US +1 (212) 268 4919
netConsult Ltd, Level 3, 75 Wells Street, London W1T 3QH // www.netconsult.co.uk Richard McDonald, Director // T:+44 (0)20 71003310 // [email protected] // David Mansfield, Director // T:+44 (0)20 71003310 // [email protected] in 2002, netConsult is an award winning provider of managed IT Services to the global alternative investment industry. We aim to provide a high level of technical expertise to our clients combined with a dedication to customer service. Our ethos is based upon designing secure IT platforms which are manageable over the long term. We are a trusted technology provider to a large portfolio of clients ranging from small start ups to large global funds. netConsult provides a bespoke service to its clients and provides a full suite of IT services including Cloud Services, Outsourced IT, BCP, Virtual CTO and IT Security.
Nirvana Solutions, Mark Donovick, Vice President - Marketing // 80 Broad Street, Suite 1808, New York, NY 10004 // Tel: +1 212 768 3410 // email: [email protected] // London: Tony Premi // [email protected] // +44 (0) 203 174 2342 Nirvana Solutions is a cloud-based financial technology company that provides outsourced portfolio management solutions to hedge funds, prime brokers, and fund administrators. Nirvana is headquartered in New York City, with offices in San Francisco, London, and Dehli.Investment managers need a reasonably priced, entry-level yet scalable system which enables them to minimize upfront capital outlay and concentrate on alpha generation instead of systems and data management. Nirvana consolidates and manages data across multiple asset classes, funds, accounts, traders, prime brokers and custodians in a single integrated platform to provide our clients with cloud-based OMS, PMS, risk management and reporting solutions.
Netage Solutions, Inc., 400 Talcott Avenue, 3rd Floor, Watertown, MA 02472 // www.netagesolutions.com Andrew Nelson, Head of Hedge Fund Sales // Tel: 617 393 2368 // email: [email protected] Netage Solutions has been a premier provider of industry-specific CRM software and online reporting systems for the alternative assets industry since 1998, building a client base that includes hedge funds, funds of funds, private equity and venture capital firms, real estate investment firms, prime brokers, family offices, and institutional investors. Intuitive and highly configurable, Netage's flagship Dynamo™ Suite has improved the productivity of investor relations, marketing, and research teams worldwide. Deep industry experience, dedicated client service and a culture of continuous innovation has made Netage Solutions the vendor of choice for more than 275 of the world’s premier alternative investment firms. Collectively, our clients manage over $650 billion in assets. To learn more about Dynamo™, or to request a product demo, please contact us at [email protected].
Solidfire, Grant Stephens // +44 (0) 7538 440722 // [email protected], Martin Cooper // +44 (0) 7943 211 979 // [email protected]
SolidFire is the market leader in all-SSD storage systems designed for next generation data centers. Leveraging SolidFire’s all-flash architecture, with volume-level Quality-of-Service (QoS) controls, customers now can guarantee storage performance to thousands of applications within a shared infrastructure. Coupling this functionality with in-line data reduction techniques and system-wide automation results in substantial capital and operating cost savings relative to traditional storage systems.
Watson Wheatley Financial Systems, Duncan Wheatley, managing director // T:+44 (0)1608 649640 // [email protected] // www.watsonwheatley.com // Marston House, Cromwell Business Park, Chipping Norton, Oxfordshire, OX7 5SR
Watson Wheatley is a reconciliation software specialist with extensive knowledge of hedge fund operations. Its flagship product i-Recs was specifically de-signed for the hedge fund market having been originally developed for one of the largest alternatives managers in Europe. i-Recs has a unique accounting engine underpinning the product which enables fully integrated trade and cash reconciliations and has the ability to calculate total equity on margin traded instruments. Packaged with i-Recs is a powerful data aggregation tool allowing interface on-boarding in a fraction of the time of traditional solutions. WWFS offers a user-based pricing model with no up-front licence costs.
Sentronex, Joe Sluys, CEO // +44 (0) 207 397 7400 // [email protected], 42 Southwark Street, London, SE1 1UN, www.sentronex.com
Delivering expert, outsourced IT services bespoke to London’s financial community, Sentronex is committed to providing the best of the following services: IT Support, Disaster Recovery, Financial IT Consultancy, Cloud Computing, Hosting and Connectivity. Sentronex’s rapid growth since launching in 2005 is down to a winning combination of specialist technical knowledge and the extensive, fully-managed facilities we offer including multiple Disaster Recovery sites and a state-of-the-art Data Centre. Sentronex looks after an impressive range of FCA regulated clients spanning both the buy and sell-side. With Sentronex, there is no such thing as a one-size-fits-all approach; every solution is tailored to meet the individual needs and requirements of each financial firm.
James Pinnington, Head of Hedge Fund Sales // T: +44 (0)20 3320 5750 // [email protected] For more information about Misys Sophis products, please contact: [email protected] // www.misys.com
Misys Sophis has more than 25 years experience in providing fully integrated cross-asset portfolio and risk management solutions to the world's leading financial institutions. Sophis VALUE is Misys’ flagship system for alternative investment and provides a single solution for portfolio management, performance measurement, investment accounting, risk management, reporting, compliance and data management together with the required connectivity to third par-ties such as prime brokers, custodians and administrators, as well as trading (EMS/OMS), clearing and matching systems.
USA: Branden Jones, 800 Third Avenue, 39th Floor, New York, NY 10022 // T: +1 (212) 293-1836// [email protected]
Liquid Holdings Group is a cloud-based technology and managed services provider to the global hedge fund and active trading markets. We provide hedge funds and other asset managers with the best way to de-risk their business, enhance decision-making, improve transparency and ultimately put more money into their investors’ pockets. While our business is new, our technology has been used for over six years by the most demanding institutional portfolio managers and traders, and its adoption rate is strong with over 45 clients and growing. We are headquartered in New York with offices in Hoboken, Aventura and London.
Jim Serpi – London // T: +44 (0) 20 7821 4950 // [email protected], Andre Fundora – New York // +1 646 385 7554 // Suite 26, 2 Station Court, Imperial Wharf, London SW6 2PY // www.matscosolutions.com Matsco Solutions Group, established in 2002, is the trusted IT support partner for hundreds of hedge funds and alternative investment firms across Europe, the United States and Asia. Specialising in hedge fund technology, Matsco Solutions provide best-of-breed industry solutions to its clients including private cloud services, business continuity planning, specialist start-up services, technology design, support and monitoring, virtual CTO services and a 24/7 engi-neer staffed helpdesk. The company was co-founded by Patrick Ferrall and Jim Serpi, who bring a wealth of industry experience, and has offices in London, New York, Stamford, San Francisco Bay, Hong Kong, Singapore and Beijing.
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To promote your company, email: directory@hfmweek .com or call UK +44 (0)20 7832 6615 // US +1 (212) 268 4919
Orb Employee Benefi ts // Contact: Geraint Williams, Director // T: 0845 0138709 // [email protected] // www.orb-eb.co.uk
Orb is a highly experienced team of workplace pension and employee benefi ts consultants, specialising in helping hedge funds and their service providers develop effective employee reward programmes.workplace pensions & auto-enrolment - healthcare & dental - life assurance & income protection - keyman & partnership protection - travel insuranceCombining the knowledge you would expect from a large business with the personal approach of a smaller fi rm, we are committed to providing excellent client service. Don’t just take our word for it - 97% of our clients say we are extremely or very responsive.
One Ten Associates 1 Berkeley Street, London, W1J 8DJContact: Mush Ali (ACA), Director // T: +44 (0)20 7016 9910 // [email protected]
One Ten Associates is a specialist recruitment fi rm that services the permanent and temporary needs of the alternative/fund management sector. Our consultants have been in this sector for over ten years and have the network to cover your strategic senior hires as well the junior to mid-senior needs.
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David Ross, Global Head of Marketing // +1 732-318-7109 // [email protected] // Jonathan White, Business Development USA // +1 646-861-3409 // [email protected] // Ranjan Mishra, Business Development UK +44 (0)20 7016 9170 // [email protected] // Bangalore +91 80 30982200 // Mumbai +91 022 30952200We support a full range of administration, middle offi ce and accounting services for investment managers. Tailored for each manager’s specifi c requirements, our Best Thinking and Best Practices help managers grow. We offer customized Straight Through Processing and integrate post-trade operations across virtually every asset class, currency, border, or structure you can imagine. Our deep operational and accounting expertise backed by state of art technology enables a high degree of control via automation in a 24 hour, 6 days a week global delivery model. The result is a new level of scalability and fl exibility to help you grow.
ACA Compliance Group (Europe) Ltd // 11 Berkeley Street, Mayfair, London, W1J 8DS // www.acacomplianceeurope.comRon G Weekes, Chief Executive // T: +44 (0)20 7042 0500 // [email protected] Zappacosta // 589 Eighth Avenue, 7th Floor New York, NY 10018, USA // T: +1 212 868 5940ACA is the world’s largest independent compliance consultancy. Operating from 12 offi ces in America and Europe with a team of 140 – a third of which are former FSA, SEC or NFA (CFTC) regulators – ACA support over 700 clients including a third of the 100 largest hedge fund managers, four of the top fi ve PE fi rms, large retail and long-only managers, asset management institutions, Trusts, brokers and smaller boutiques. ACA in London includes ex-FSA and ex-SEC examiners – a unique offering in Europe.
Cordium // London (headquarters), NY, Boston, SF, HK // UK: Sarah Donnelly // T: +44 (0) 203 141 9658 // [email protected] // USA: Hannah Weinstock Gallagher // T: + 1 212 515 2800 // [email protected] // HK: Derek McGibney // T: +852 3478 7378 // [email protected] // www.cordium.comCordium is the leading global provider of regulatory compliance consulting, accounting and tax services and software to the asset management and securi-ties industry. Today, Cordium has offi ces in London, New York, Boston, San Francisco, Malta and Hong Kong and employs more than 200 experienced profes-sionals who support more than 1,500 investment businesses. Our clients range from start-ups to large fi rms with well-established track records. Our asset management and securities sector focus means we always bring direct, relevant experience to advising our clients, helping them to meet their compliance and regulatory challenges and turning regulatory compliance into a must-have business advantage.
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Robert Quinn // Managing Director // [email protected] // 42 Brook Street, London W1K 5DB // www.robertquinn.co.ukT: +44 (0)207 958 9127 Robert Quinn Consulting is a London-based premier fi nancial compliance consultancy. We specialise in integrated FCA and SEC compliance programmes and both UK and US fi nancial regulatory compliance to institutional and asset management clients worldwide. Robert Quinn Consulting was founded in 2007 with the goal of providing pragmatic guidance and responsive customer service to our clients. Our dedicated team allows us to be a focused resource contributing to your success.
ManagementPlus // Kavita Thomas, Manager // email: [email protected] // Tel: + 352 2747 4724
Operating from our strategic locations in Luxembourg, the Cayman Islands, Singapore, New York and London, we are a leading independent provider of fi duciary and oversight services to the international funds industry, well recognised by the institutional investor community. Core services include indepen-dent directors, UCITS and AIFM management company solutions and Luxembourg conducting persons. The independent directors are a panel of carefully selected, highly skilled directors from diverse and relevant backgrounds, available around the globe to suit clients' needs.
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Darren Gordois & Peter Peacock // +44 (0) 20 3137 8140 // [email protected] or [email protected] // www.mondrian-alpha.com // 5 London Wall Buildings, London, EC2M 5NS
Mondrian Alpha Recruitment Solutions provides innovative human capital solutions & research, market intelligence and competitor analysis to our clients. Our hedge fund coverage includes: sales & marketing, trading & structuring and infrastructure (operations, fi nance, legal & compliance). We pride ourselves on delivering complete, targeted and fast execution across our product suite.Please call in or email us to discuss your requirements.
Chris Apostolou, Director // +44 203 371 0889 // [email protected] // www.arbitrage-search.comArbitrage Search specialises in macro for hedge funds and banks, please call to discuss
Providing the complete DNA infrastructure for funds
Peter HughesGroup Managing DirectorTel: +44 7780 [email protected]
Thalius HecksherGlobal Head of Business Development Tel: +1 305 646 [email protected]
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