S P E C I A L R E P O R T

M A N A G E R I N T E L L I G E N C E

well as family offi ces, are focused on investing in founder’s share classes or anchor deals, where they can get signifi cant discounts on the fees paid without taking an economic stake in the new fi rms.

“Th ere are a lot more negotiations occurring between the endowment/foundation/family offi ce set about what the appropriate market rates are for new launches although not every launch is created equal.”

In Asia, where marquee launches have also been less prev-alent over the last 12 months, the emphasis on fee negotia-tions is equally strong.

“Th ese days, if managers are not off ering a separately man-aged account, they’re considering diff erent share classes,” says Nomura’s global co-head of prime fi nance, Chris Antonelli.

Malik adds the fear of missing out is very prevalent in many allocator and prime circles. Managers that aren’t able to start with north of $500m on day one will fi nd it challeng-ing to generate the buzz needed to create this fear.

“Th ere’s an art and a science to raising capital on day one and a lot of it revolves around creating that scarcity value that then leads to the fear of missing out.”

While equity-based strategies continue to dominate, with 117 of this year’s 516 launches so far this year focused on that strategy, event-driven and macro strategies also feature frequently in this year’s crop.

Particularly on the macro side, European prime brokers point to the market environment as having a signifi cant im-pact on investor demand.

“It’s very macro-centric in Europe, which is interesting – the demand for macro-focused managers is high, and topi-cal, given recent market events,” says the cap intro chief at one prime broker.

New managers this year have had some prett y big shoes to fi ll, given that 2015 was the year of the “mega launch”, explains Omeed Ma-lik, head of BAML’s emerging manager pro-gramme and US prime brokerage distribution.

“Th ere were a number of anomalous, idi-osyncratic events last year that led to some massive launches.”

Th ese events – such as the closure of Ziff Brothers’ hedge fund unit and the conversion of SAC Capital Advisors into Point72 Asset Management – have not had the same impact this year. Instead, seeding activity from the likes of Reservoir Group and HS Group and the resolution of non-compete disputes have shaped this year’s list, with regulatory con-straints also aff ecting the number of new ventures.

European consulting chiefs agree, with one London-based prime adding that many portfolio managers who would have considered launching their own businesses a few years ago now prefer to launch funds within the safer confi nes of a large fi rm.

Ex-Perry Capital portfolio manager Himanshu Gulati joining Man Group is one such example. Another is that of Stephen Kirk, a former partner at Lansdowne, who was planning to set up Campden Square Capital with around $200m, but then joined former Lansdowne colleague Ross Turner’s fi rm Pelham Capital.

For the biggest starters, service providers agree that founders’ arrangements or giving up a slice of a fi rm’s equity, are now commonplace options, with at least seven of the ‘20 for 2016’ understood to have such deals in place.

“While we continue to see some very large and high-ped-igree launches, the type of capital is diff erent,” Malik adds. He explains a number of endowments and foundations, as

HFMWEEK TAKES A LOOK AT THE BIGGEST PROSPECTS FOR NEXT YEAR

ANALYSIS LAUNCHES

8 -14 O C T 2 0 1 5 H F M W E E K . CO M 3

Welcome to a HFMWeek special report highlight-ing some of the regular analysis and business intelligence we provide to our membership of hedge fund professionals.

Our deep network of global contacts across the alterna-tives sector help ensure our team of experienced financial journalists are on top of the issues that really matter to our members.

For example, in this issue we highlight and analyse the new and upcoming launches getting the biggest investors and cap intro heads excited. The launch section of our magazine and website is one of our most popular features as managers look to stay abreast of what their peers and competitors are up to. We usually cover over 30 exclusive launches each month.

We also spend a huge amount of time researching and building relationships with the investor community. In this issue you can read our in-depth research on the current environment for seeders and details of the investors with the most dry powder to allocate to managers. We’ve also includ-ed our analysis of the hedge fund sector’s most influential investor names.

Basel III and other banking rules are having a huge knock on effect when it comes to certain hedge fund strategies and our team has been keeping a close eye on proceedings. In this special report we assess how managers have been trying to mitigate the impact of increasing clearing costs and there is plenty more analysis on our website.

We hope you enjoy this special report and continue to engage with the HFM team. n

p.mcmillan@hfmweek.com

PAUL MCMILLAN

@mcmillan_paul

H F M W E E K . CO M 3

well as family offices, are focused on investing in founder’s share classes or anchor deals, where they can get significant discounts on the fees paid without taking an economic stake in the new firms.

“There are a lot more negotiations occurring between the endowment/foundation/family office set about what the appropriate market rates are for new launches although not every launch is created equal.”

In Asia, where marquee launches have also been less prev-alent over the last 12 months, the emphasis on fee negotia-tions is equally strong.

“These days, if managers are not offering a separately man-aged account, they’re considering different share classes,” says Nomura’s global co-head of prime finance, Chris Antonelli.

Malik adds the fear of missing out is very prevalent in many allocator and prime circles. Managers that aren’t able to start with north of $500m on day one will find it challeng-ing to generate the buzz needed to create this fear.

“There’s an art and a science to raising capital on day one and a lot of it revolves around creating that scarcity value that then leads to the fear of missing out.”

While equity-based strategies continue to dominate, with 117 of this year’s 516 launches so far this year focused on that strategy, event-driven and macro strategies also feature frequently in this year’s crop.

Particularly on the macro side, European prime brokers point to the market environment as having a significant im-pact on investor demand.

“It’s very macro-centric in Europe, which is interesting – the demand for macro-focused managers is high, and topi-cal, given recent market events,” says the cap intro chief at one prime broker.

New managers this year have had some pretty big shoes to fill, given that 2015 was the year of the “mega launch”, explains Omeed Ma-lik, head of BAML’s emerging manager pro-gramme and US prime brokerage distribution.

“There were a number of anomalous, idi-osyncratic events last year that led to some massive launches.”

These events – such as the closure of Ziff Brothers’ hedge fund unit and the conversion of SAC Capital Advisors into Point72 Asset Management – have not had the same impact this year. Instead, seeding activity from the likes of Reservoir Group and HS Group and the resolution of non-compete disputes have shaped this year’s list, with regulatory con-straints also affecting the number of new ventures.

European consulting chiefs agree, with one London-based prime adding that many portfolio managers who would have considered launching their own businesses a few years ago now prefer to launch funds within the safer confines of a large firm.

Ex-Perry Capital portfolio manager Himanshu Gulati joining Man Group is one such example. Another is that of Stephen Kirk, a former partner at Lansdowne, who was planning to set up Campden Square Capital with around $200m, but then joined former Lansdowne colleague Ross Turner’s firm Pelham Capital.

For the biggest starters, service providers agree that founders’ arrangements or giving up a slice of a firm’s equity, are now commonplace options, with at least seven of the ‘20 for 2016’ understood to have such deals in place.

“While we continue to see some very large and high-ped-igree launches, the type of capital is different,” Malik adds. He explains a number of endowments and foundations, as

HFMWEEK TAKES A LOOK AT THE BIGGEST PROSPECTS FOR NEXT YEAR

ANALYSIS LAUNCHES

8 -14 O C T 2 0 1 5 H F M W E E K . CO M 3

CASTLE RIDGE INVESTMENT MANAGEMENTFOUNDER: Michael SwotesFOUNDED: July 2015, ConnecticutSwotes is known for his exper-tise in real estate stocks, having most recently led relative-value investments in that sector at Carlson Capital and his own firm will run a similar strategy. Swotes has received backing from influential seeders Reser-voir Group as well as Starwood Capital founder Barry Sternlicht’s family office. Primes estimate Castle Ridge is coming to market with “several hundred million”. The start-up is using Starwood’s office space and infrastructure, including CFO Steven Gottschalk .

CEDRUS PARK MANAGEMENTFOUNDER: Anthony ChedidFOUNDED: April 2015, New YorkAn SAC Capital Advisors alumnus, Chedid was a technology specialist overseeing some $500m at Steve Cohen’s firm and is in the process of getting his own tech-focused venture off the ground. Reports from earlier this year indicated he could have at least $100m in commitments, with primes tipping the offering to garner significant interest on account of Chedid’s pedigree. The portfolio manager actually had two stints at SAC, and worked at Citadel subsidiary PioneerPath Capital in between.

DEEPWATER CAPITALFOUNDER: Mingchun Sun, Jim XiangFOUNDED: May 2015 (SFC registration), Hong KongAlthough at an early stage, this greater China equity-focused firm is generating a buzz in Hong Kong, not least because they are reportedly taking things slowly on the marketing front. Led by former Daiwa Capital Markets chief economist Sun, primes describe this firm as “one to watch”. The firm launched in July with a seed ticket from Ascalon, a subsidiary of Westpac Banking Corporation, lending them credibility, one broker explained.

EISLER CAPITALFOUNDER: Edward EislerFOUNDED: May 2015, LondonIncorporated earlier this year by

former Goldman Sachs trader Edward Eisler, this upcoming macro launch has already raised nearly $1bn from investors, according to reports, and is a client on the shopping list of several investment banks. “It’s one we want,” one European consulting chief told HFMWeek, indicating Eisler was one of only six new firms they want to work with on a primary basis. Eisler, who headed up currency, interest rate and commodities trading at Goldman, reportedly has a 12-strong team and will start trading in Q1 2016.

EVERETT CAPITAL ADVISORSFOUNDER: Kelly HampaulFOUNDED: March 2015, LondonEx-Taconic Capital portfolio manager Hampaul told clients he was retiring last December but details of his new venture surfaced earlier this year. Trading equities and credit at $8bn Taconic, Hampaul’s Everett Opportunities Fund will focus predominantly on European event-driven opportunities, seeking “asymmetric payoffs across the capital structure and market cycles”, according to a marketing document seen by HFMWeek. The firm, which will launch this quarter, brought Myriad founding principal Jonathan Summers on board in September as head of business development and IR, a move which “lends them credibility”, one prime says.

FLORIN COURT CAPITALFounders: Douglas Greenig, Anthony Vinitsky, Simon Nicholls, David DenisonFOUNDED: January 2015, LondonSet up by a trio of quants who latterly worked at AHL, Florin Court is the latest addition to Swedish hedge fund giant Brummer & Partners’ stable. CEO/CIO Greenig left Man Group in November after two years with the $79bn UK-listed firm and has partnered with former AHL head of investment opera-tions Vinitsky, who is Florin’s COO and CRO. Florin’s CTO, Nicholls, previously ran quant trading at Gloucester Research while dep-uty CIO Denison was previously AHL’s head of currency trading. Running $267m since it started

trading in August, Florin Court could follow in the footsteps of Brummer spin-out Canosa.

GLEN POINT CAPITALFOUNDERS: Neil Phillips, Jonathan FaymanFOUNDED: September 2015, LondonThe second of three macro launches in this year’s 20, Glen Point will have an emerging markets slant and run a strategy similar to the $1.4bn fund Phil-lips and Fayman co-managed at their former employer, BlueBay. Reportedly launching early next year, the duo have brought on board ex-Comac Capital CEO Hopewell Wood as director of business develop-ment, and BlueBay colleagues Alan Jacobson and Colin Read as CFO and head of risk & systems respectively. The lineup indicates the firm will be “signifi-cant”, according to one service provider who can’t work with them on account of an existing relationship with BlueBay.

GOVERNORS LANEFOUNDER: Isaac CorréFOUNDED: April 2015, New YorkA contender for being the “big-gest launch this year” as far as US managers go, according to several prime brokers, Corré has the same pedigree as Anand Desai, who’s firm Darsana was one of last year’s 20. Having previously managed an event-driven strategy at Eton Park, Corré has brought on board colleague Fenil Ghodadra as a partner. Governors Lane, which will invest in both equity and credit opportunities, will launch with several hundred million, says one consultant close to the situation, and is in the run-ning to receive a $500m ticket from billionaire hedge fund vet George Soros, according to reports earlier this year.

GREENVALE CAPITALFOUNDER: Bruce EmeryFOUNDED: March 2015, LondonSet up by former Naya Capital Management co-founder Emery, Greenvale started trading its long/short equity fund on 1 Oc-tober. Several service providers highlighted the venture should be considered on account of

Emery’s pedigree and because the low-net strategy was in demand from investors. Sources familiar with the firm indicate the $150m founders’ share class was oversubscribed and that the firm should reach its soft-close target of $500m within a few months.

HUDSON EXECUTIVE CAPITAL (HEC)FOUNDERS: Doug Braunstein, Jim WooleryFOUNDED: January 2015, New York“This firm has good pedi-gree” says one prime about this launch, set up by the JP Morgan duo. Braunstein was vice chairman/CFO at the bank while Woolery was co-head of M&A for North America. The firm soft-launched its “collaborative activist” strategy at the begin-ning of the year with a $250m commitment from the founders and opened to external inves-tors in August, with SEC filings indicating HEC now manages $333m across the onshore and offshore vehicles. A prestigious team has been drawn from Manatuck Hill Partners, High-bridge Capital Management and Hoplite Capital Management.

HUDSON WAY CAPITAL MANAGEMENTFOUNDER: Mike HyattFOUNDED: January 2015, TexasHyatt spent five years at $10bn asset manager Jasper Ridge Partners and also held analyst roles at Highside Capital Man-agement and Morgan Stanley, and is considered somewhat of a “rising star” in Texas, ac-cording to one prime. Highside fund controller Carrie Bass has come onboard as CFO, having spent over seven years at Lee Hobson’s firm, which returned investor capital in 2013. The US large cap-focused firm launched in January with around $200m, sources indicate and its high-turnover shorting is sought after “given the markets,” one prime added.

HUNTER PEAK INVESTMENTSFOUNDER: Michael KarschFOUNDED: March 2015, New YorkFollowing a sabbatical during which he helped build up a

chain of juice bars, seasoned industry pro Karsch is making a comeback. Equity-orientated Hunter Peak is interesting because of the “empirical business understanding” Karsch got from his break, one prime tells HFMWeek. Members of HPI’s team include head trader Matthew Plotkin, who spent 13 years working at $3bn Karsch Capital, and former Magnetar analyst Tom Tully, senior analyst and research partner.

KINTBURY CAPITALFOUNDER: Christopher DaleFOUNDED: March 2015, LondonThis equity market neutral offering also comes highly rated and represents a key account target for one bank hoping to get in once Dale’s value-focused firm has “bedded down”. The ex-Millennium pro is joined by COO John Aves and CEO Michael Burton, both previously at Marble Bar. Reports indicated that Kintbury launched with at least $200m, with one broker indicating AuM could now be nearing $500m.

LATIMER LIGHT CAPITALFOUNDER: Scott PhillipsFOUNDED: October 2014, New YorkFormer Lone Pine managing director Phillips has almost a decade’s worth of experience working for Stephen Mandel’s $28bn firm. Primes say his back-ground is valued by investors and that the firm should start out with significant day one capital of around $300m. The long/short equity strategy will focus predominantly on US stocks.

OXBOW CAPITAL MANAGEMENTFOUNDER: Wesley WongFOUNDED: June 2015, Hong KongWong lead TPG Axon’s Hong Kong operations and was there for over nine years, having also had stints at Blackstone Group and Credit Suisse. His Asian knowledge stands him in good stead, service providers say, while Reservoir Group backing – the first Asian manager Dan Stern’s firm has seeded – is a strong endorsement. Wong has reportedly started with around

ANALYSIS LAUNCHES

4 H F M W E E K . CO M

$200m, with one prime describ-ing the offering as “one I would put my money on”.

ROKOS CAPITAL MANAGEMENTFOUNDER: Chris RokosFOUNDED: March 2015, LondonOne of the biggest launches of the year and one which has primes on both sides of the Atlantic excited, the former Brevan Howard partner’s of-fering went live on 1 October. AuM estimates range, with one service provider indicating Rokos started with around $2.5bn of which $700m is personal wealth; on par with a few of last year’s 20. His former employer has also taken a stake. With a host of former Comac and Brevan Howard employees on the books, the global macro firm is “in a different league” to other launches this year, the service provider added.

SAND GROVE CAPITAL MANAGEMENTFOUNDER: Simon DaviesFOUNDED: January 2015, LondonDavies left Cheyne Capital in September 2014, having spent 11 years there, and oversaw a $1bn-plus event-driven strategy for the firm alongside co-manager Michel Massoud. Massoud has just launched Melqart Asset Management, but sources believe Davies will fare better, as Sand Grove received a seed ticket of around $250m.

SEALIGHT CAPITALFOUNDER: Simone ArbibFOUNDED: December 2014, LondonConsidered highly in hedge fund circles, Arbib left Ivaldi in June 2014 alongside equity pros Marco Gennari and James Miller. Sealight’s European Opportuni-ties Fund, a low net long/short equity offering, launched with

just under $100m and now runs around $200m, according to reports. Despite starting with less than some of our other contenders, primes describe the team, which also includes COO Steve Banner, previously at Peloton Partners, and head of ops Andrew Freshney, former Highgate Investment Manage-ment COO, as “professional”, with Arbib’s proven “money-making experience” a good indicator of things to come.

SUNRIVER MANAGEMENTFOUNDER: Will CookFOUNDED: June 2015, ConnecticutFormer Ziff Brothers sector head Will Cook has received plenty of interest from potential investors for his long/short equity offering, according to one prime in the know. “People have wanted to meet him – they’re interested in anyone with that

kind of pedigree.” It isn’t known whether Sunriver will receive Ziff Brothers’ backing, as two other managers who spun out last year – Michael Sidholm and David Fear – did, but one source indicates he may be able to capitalise on the fact that this year has seen a “more concentrated” number of high-profile US launches. Cook has hired former JAT Capital Management CFO Justin Morgan in the same role.

ZENTIFIC INVESTMENT MANAGEMENTFOUNDERS: Burke Lau, Christopher LeeFOUNDED: March 2015, Hong Kong

“Investors just now are looking for quant managers – market neutral guys who know this space well,” says one Hong Kong-based prime about this duo, who have come from Mac-quarie Securities and BlackRock respectively. Their chances of success are enhanced by their HS Group/Gottex backing, un-derstood to be around $200m of their $250m assets. Zentific also has in its favour the fact that several of its peers in the pan-Asian market neutral space, such as Sensato or Macquarie, are hard-closed to new invest-ment. “Anyone who wants access to this strategy has to go to Zentific.”

Abberton Capital Management: Fredrik Juntti’s London-based long/short equity firm focused on catalysts launched in January this year with a multi-year commitment from a US backer. Firm now manages $225m and has a healthy pipeline of investment coming in, including a potential endowment ticket.

Aravt Global: The first large-scale launch out of Ziff Brothers, Yen Liow’s firm launched in February 2014 with over $700m and quickly scaled above $1bn. Latest AuM unknown.

Arkkan Capital Management: The offering from Goldman Sachs special sits pro Jason Brown has a very high profile in Hong Kong and reportedly received $200m from Blackstone. Assets are now estimated to be between $300m and $500m, according to one prime.

Banbury Partners: Launched By Baker Burleson and Stormy Scott, this North Carolina firm had ambitions to launch with $300m. Latest assets unknown.

BosValen Asset Management: Ken Xu’s firm reportedly launched with around $300m, some of which came from Alibaba magnate Jack Ma, according to one source. The firm managed $400m as of 31 August.

Darsana Capital Partners: Anand Desai’s firm came to market having raised $1.2bn, and now runs roughly $2.5bn, making it one of last year’s most successful launches.

Immersion Capital: Michael Sidhom launched his London-based equities firm with around $600m, including some backing from his previous employers Ziff Brothers. Latest AuM unknown.

Folger Hill Asset Management: Another $1bn launch, Sol Kumin’s firm easily managed to raise the $400m commitment Leucadia National Corp agreed to make if the former SAC Capital pro managed to match it. Current AuM unknown.

Kontiki Capital Management: Launched by former Ziff Brothers Asia head Gregard Heje, Kontiki was highly rated by primes last year. Current AuM is not known.

Melvin Capital: Plotkin was one of a clutch of managers emerging from the SAC/Point72 stable. He managed over $1bn for Steve Cohen and according to reports last month, Melvin Capital has also reached that threshold.

Pagoda Asset Management: Adam Bernstein’s long/short equity firm launched last September. The firm now manages $168m, HFMWeek understands.

Perdurance Asset Management: Launched by Ivan Briery, Jersey-domiciled Perdurance’s progress has been kept under wraps. Thought to have launched with $500m, current AuM is around $900m, according to one prime.

Saferidge Capital Partners: Paul Saferstein’s Asia-focused firm did not quite get the traction anticipated, with one prime indicating the firm’s anchor investor pulled out. Emails to the firm remain unanswered.

Seven Harbour Global: Sean Grogan’s long/short equity strategy managed to get up and running with an anchor

investor – thought to be UK pension consultant Cardano – and now manages roughly $200m.

Pleiad Investment Advisors: Seeded by HS Group, the firm founded by Ken Lee and Michael Yoshino is understood to be running around $500m now.

Primestone Capital: Launched by former Carlyle Group trio Jean-Pierre Millet, Franck Falézan and Benoit Colas, the “constructive activist” manager received a €150m ticket from Sienna Capital, an affiliate of Albert Frère’s Groupe Bruxelles Lambert earlier this year. The firm now manages between $500m and $1bn.

Sentinel Dome Partners: Tipped to potentially be the biggest West Coast launch last year, Munir Alam’s firm secured an undisclosed investment from Chicago FoHF Aurora Investment Management in October. Latest AuM unknown.

Sophos Capital Management: Jim Carruthers’ firm, specialising in short-selling, reportedly got off the ground with $200m, including a ticket from the Yale University endowment. Latest AuM unknown.

Squarepoint: The nQuants systematic trading spin-out from Barclays got off the ground in January, opening offices in London, New York and Singapore among others. AuM unknown.

Two Creeks Capital Management: Ryan Pedlow’s firm rivalled Darsana and Folger Hill in terms of start-up capital raised, reportedly $1.5bn. Latest AuM not known.

WHERE ARE THEY NOW ? CL ASS OF 2015

CRITERIATo qualify for consideration, hedge fund management firms must have been registered in the 12 months between 1 September 2014 and 31 August 2015. The chosen 20 are those deemed most likely to achieve significant future success, based on conversations with senior industry professionals and HFMWeek’s editorial judgement.

H F M W E E K . CO M 5

6 H F M W E E K . CO M

ANALYSIS TOP 5 SEEDERS

While several big names have been relatively quiet, 2015 has nevertheless recorded considerable activity in the seeding of emerging hedge fund managers. Our sixth annual HFMWeek seeding analysis looks in detail at the top five seeders to watch over the year ahead BY CHRIS JOSSELYN

Anderson, a senior associate in the business transactions group at Seward & Kissel, who specialises in seed deals.

“There’s obviously a strong interest in recycling their powder into more deals – redeploying it to new managers and ‘purchasing’ additional revenue sharing. For this reason, we expect there to be a lot more activity next year by the institutional seeders.”

Blackstone is expected to resume seeding activity in Q1 2016 when it begins deploying from its Strategic Alliance III vehicle, which it began marketing to investors in February this year. It had $655m invested as of October.

Titan Advisors is also understood to be raising capital for a seed vehicle that could begin deploying in 2016.

The Stamford, Connecticut-based FoHF is targeting $500m for the fund, and is still finalising the exact timeline for the launch with a number of key investors.

However, the lack of activity this year by the giants of the space does not mean seed capital has dried up. Indeed, HFMWeek’s sixth annual review of the seeding space reveals that at least $830m of seed capital has been deployed by the top five seeders over the past year compared to $1.2bn in 2014. The top five seeders have over $2.3bn of dry powder to put to work , compared to $2bn last year.

“I’m not sure it’s quieter, there is just less programmatic seeding, and more ad hoc. In Europe and the US there isn’t anyone active in a big purposely raised fund deploying assets at the moment, but there are a number of seeders asset-raising,” says Erik Serrano Berntsen, CEO and co-founder at Stable Asset Management.

SEEDINGTOP 5

THE HFMWEEK

With big-name players quiet so far in 2015, one could be excused for thinking that there has been a lull in activity in the seeding space.

Blackstone is understood to have largely deployed the funds from its

Strategic Alliance II seed vehicle, and so far this year, it is yet to register a single big-ticket deal, although it is in asset raising mode for its third seeding vehicle.

Another big name, Reservoir, is also understood to be inactive in seeding managers for the moment. In 2014 it allocated $200m to London-based activist Abberton Capital.

Grosvenor, too, has exhausted its own supply of dry powder after making just one deal in the past year, seeding New York-based Hollis Park Partners with $50m in December 2014.

“Many of the major seeders will have significant amounts of cash released from lock-ups relatively soon relating to deal activity they did one to three years ago,” says Gerhard

H F M W E E K . CO M 7

DROBNY CAPITAL

Santa Monica, California-based Drobny Capital committed $150m to a single undisclosed seed deal in the second quarter of this year.

It has a focus on macro strategies, as Ben Savage, managing director at Drobny, explains.

“We think that macro strategies in particular, offer a degree of insight and informational value for investors that other hedge fund strategies typically do not, and we’ve developed our approach to allocating to those strategies with the design of trying to harvest that insight from relationships that you can build with macro hedge fund managers with the idea that as an allocator, you can use that information flow and that insight about capital markets, to help you more broadly across your investing activities.”

In terms of dry powder, Drobny has a target deal size of $200m, and it has capacity to seed between one and three of these each year.

The firm was founded in 2007 and is led by hedge fund industry veteran Steve Drobny.

DEALS IN THE LAST 12 MONTHS:1

$200m+DRY POWDER05

TOP 5 12-MONTH SPEND

TAGES CAPITAL$400M+

6

12-MONTH SPEND

DEALS

economics. Every deal we have done has been bespoke and highly negotiated, with the objective of partnering with the manager as they build out their business. We think that is one of the ways that we have differentiated ourselves as a seed investor”, says Tages’ head of seeding strategies Mark de Klerk.

Over the next 12 months, Tages has at least $600m of dry powder to deploy, and Ucits funds are a particular focus for year-end into 2016.

“We’re open to reviewing any strategy that is able to provide good long-term risk-adjusted returns and is scalable relative to the seed investment made,” adds de Klerk.

OFFERING SOMETHING DIFFERENTSome seeders, by not investing out of a dedicated private-equity-style vehicle, offer something different to the usual powerhouses. One such firm is $2bn New York-based Protégé Partners.

“One of the things that differentiates us from many traditional seed funds is that our seeds go within our commingled funds and customised fund-of-ones who are syndicated co-investors with those seeds,” says Michael Weinberg, chief investment strategist at Protégé Partners.

“Unlike a private equity fund, where they may pull the seed capital after the two- or three-year period, we’ve actually historically invested with our seeds beyond that period.”

London-headquartered Stable Asset Management seeds from its balance sheet and, as such, has no set level

NEWALPHA ASSET MANAGEMENT$197M5

GROSVENOR CAPITAL MANAGEMENT$50M1

DROBNY CAPITAL$150M

1

STRIDE CAPITAL$30-50M (EST.)

1

“But I don’t think that’s symptomatic of anything to do with the space, because it still remains pretty active in terms of new launches; there is appetite for seeding as demonstrated by asset-raising of some dedicated funds, and ad-hoc seeded managers are getting traction.”

“Of those who have been most active recently, it’s not one or two large seeders who are doing multiple deals; rather we’re seeing an awful lot of family offices, endowments, and similar groups doing opportunistic deals, the genesis of which seems to be relationships that they’ve historically had with managers,” says Seward & Kissel’s Anderson.

London-based Tages Capital has led the way in seeding activity over the past year, allocating more than $400m across six deals.

“For Tages, seeding was a natural extension to the fast-growing and successful alternatives business we are focused on building, an activity that leverages off of our deep manager research and operational due diligence capabilities and our experience of finding and investing in emerging managers, which has been a focus since the inception of Tages”, the company’s CEO Jamie Kermisch tells HFMWeek.

“We spend a lot of time on trying to understand the manager’s goals and needs before any discussion on

THERE IS APPETITE FOR SEEDING AS DEMONSTRATED BY ASSET-RAISING OF SOME DEDICATED FUNDS, AND AD-HOC SEEDED MANAGERS ARE GETTING TRACTION

” ERIK SERRANO BERNTSEN, STABLE ASSET MANAGEMENT

8 H F M W E E K . CO M

ANALYSIS TOP 5 SEEDERS

of dry powder, which Serrano Berntsen explains allows it to be a more opportunistic seeder.

“We have capital that if we feel there is a compelling opportunity to deploy, we will. But we don’t have to deploy in the sense that we don’t have a seed fund with an investment period or raised dedicated capital or anything like that. We have been looking for opportunities, though,” he says.

Stable Asset Management has completed one deal in the past year, seeding Tide Pool Capital, a direct lending fund focused on US consumer credit, with $20m.

This was not the only seed investment in an alternative credit manager. In October, Investcorp, which declined to participate in HFMWeek’s survey, seeded alternative credit manager Nut Tree Capital Management with an undisclosed amount. Led by former Redwood Capital partner Jed Nussbaum, Nut Tree has a focus on distressed, stressed and high-yield value credit strategy with some exposure to value and event-driven equity.

TARGET AREASSeed investors often target niche strategies not found at larger houses.

“We believe our value is most additive to investors, and to the industry, if we are finding strategies that aren’t replicating what the very large hedge funds are doing, and aren’t focused on very crowded opportunities,” says Don Rogers, founder and CEO at Stride Capital.

“We’re really looking for managers that have a differentiated strategy in some way, and we are willing to look at situations that have a capacity constraint, and not all seeders are willing to do that.

“Many seeders are looking to back those strategies that have the biggest capacity, that can get really big, really fast. We just think that with those types of managers it is going to be harder for them to produce outperformance in the funds. What we’re doing is focusing on a different opportunity.”

Stride Capital, which typically invests $30m-50m per deal, seeded David Rockwell’s North Elm Capital in Q1 this year with an undisclosed amount.

Rogers won’t say how much dry powder his firm has going forward. “We do have dry powder, and we are very actively working to put more money to work. Our pace of investing is doing one or two [seed deals] a year, sometimes three or four if we’re really active.”

Managers outside Europe and the US are also benefiting from seed capital. In the summer, for example, Swiss FoHF Gottex partnered with Hong Kong-based investor HS Group to seed Zentific Investment Management, which is understood to have launched in August with around $150m in assets.

While $2bn New York-based Protégé Partners has not completed a seed deal this year, it remains an influential player and looks to have a significant pile to play with going forward.

“We have over $500m of dry powder,” says Michael Weinberg, chief investment strategist at the firm. “We are actively looking to do seeds and acceleration capital.”

“We are doing a tremendous number of meetings with emerging managers who are launching their own funds and are looking for seed capital. We also think there are a number of interesting opportunities in acceleration capital, where managers that have been around for many years have proven track records and teams, but they are just unable to raise capital,” says Weinberg.

In June Protégé Partners’ co-founder and co-CIO Ted Seides left the firm, leaving CEO Jeffrey Tarrant as sole CIO. Seides’ departure is understood not to have had a significant impact on the firm’s seed business, strategy or investments.

$500m+DRY POWDER03

DEALS IN THE LAST 12 MONTHS:0

PROTÉGÉ PARTNERS

Paris-based NewAlpha Asset Management has deployed $197m over the past year in five managers, including US managers Sabal Capital Management, Steamboat Capital Partners and Quest Global Advisors; and French managers Finaltis EfficientBeta and Fideas Capital.

“One of the key differentiators of NewAlpha compared to our peers is that we have been consistently active [in seeding] since we started more than 10 years ago,” says Philippe Paquet, managing partner at NewAlpha Asset Management.

He adds that NewAlpha has seeded an average of 4.5 deals per year since 2009 and has deployed a total of $900m in seed and acceleration capital in that period.

The French seeder’s dry powder for emerging hedge fund managers going forward is $340m.

NewAlpha is 40% owned by $60bn asset manager La Francaise, 35% by $670m partnership NewAlpha Partners, and 25% by $73bn OFI Asset Management.

$340mDRY POWDER

DEALS IN THE LAST 12 MONTHS:5

NEWALPHA ASSET MANAGEMENT04WE DO HAVE DRY POWDER, AND WE

ARE VERY ACTIVELY WORKING TO PUT MORE MONEY TO WORK. OUR PACE OF INVESTING IS DOING ONE OR TWO [SEED DEALS] A YEAR

” DON ROGERS, STRIDE CAPITAL

It appears that larger allocators are starting to see the value in investing in emerging managers too.

“Big, sophisticated investors are now coming to us because they are considering the idea of diversifying and going with smaller managers,” says Philippe Paquet, managing partner at NewAlpha Asset Management, which has provided seed capital of nearly $200m across five deals over the past year.

He explains that big investors are increasingly finding that some of the larger managers are reaching capacity, and that some have concerns about overexposure to certain established managers. He also says seeding new managers provides big investors with access to fresh ideas.

“They want to access new ideas in some way – the hedge fund industry is quite a mature industry, and when you launch a fund you generally have a strong or disruptive idea. For investors it’s a way of setting up an observatory on the industry.”

Many of the seeders HFMWeek spoke to view themselves as a crucial source of capital in volatile times for emerging managers.

“When you get market distress, like we’ve had over

H F M W E E K . CO M 9

TAGES CAPITAL

London-based Tages Capital has had a busy year, allo-cating more than $400m across six deals, including over $100m to Palmerston Capital, over $100m to Deutsche Bank Insurance-Linked Strategies, $70m to Integrated Macro Management, and €20m ($21.5m) to the Quantica Managed Futures Ucits fund, on the Morgan Stanley FundLogic platform.

Tages would not comment on two further deals it has seeded this year, as these have not yet been made public.

Building on this activity, Tages has at least $600m to deploy over the next year. “The dry powder is available from different mandates and different institutional cli-ents diversified by type and geography, so depending on the nature of the invest-ment we’re making, we may draw from different capital pools”, says Tages CEO Jamie Kermisch.

Seeding further Ucits funds is one aim for the year ahead. “Currently the focus is on equity long/short managers, event-driven and macro with a short-term priority on established managers looking to launch a Ucits fund. However, we also continue to look to source new differentiated start-up managers or investment teams”, says Mark de Klerk, head of seeding strategies for Tages.

$600m+DRY POWDER02

DEALS IN THE LAST 12 MONTHS:6

While Blackstone was not forthcoming with information, it is understood that it has largely deployed the funds from its Strategic Alliance II seed vehicle. It had raised around $2.4bn and completed 13 deals by the end of 2014, investing $600m last year in Robert Dafforn’s London-based Bybrook Capital, Mark Black’s Raveneur Capital and Arkkan Capital, an Asia-focused fund run by ex-Goldman Sachs executive Jason Brown.

Blackstone has however been active raising assets for its latest hedge fund seeding vehicle, Strategic Alliance III (SA III), which it started marketing to investors in February with a target of $1.5bn. By October of this year, SA III had $655m invested.

If previous seeding activity is anything to go by, once New York-based Blackstone starts allocating from SA III, 2016 could be a busy year after a quiet 2015.

Prior to its $600m of seed deals in 2014, its previous seed vehicle Strategic Alliance II also backed Princeton Alpha Management in 2013 after its founder, Shakil Ahmed, spun out of Citi, while the Blackstone Strategic Alliance I closed in 2007 with over $1bn of assets raised.

Blackstone’s three seeding vehicles have now invested more than $6bn in hedge funds.

$700m+DRY POWDER

DEALS IN THE LAST 12 MONTHS:0

BLACKSTONE GROUP

TOP 5 DRY POWDER

PROTÉGÉ PARTNERS

DRY POWDER $500m+

NEWALPHA ASSET

MANAGEMENTDRY POWDER $340m

DROBNY CAPITALDRY POWDER $200m+

3

4

5

BLACKSTONEDRY POWDER $700m+

1

TAGES CAPITALDRY POWDER $600m+

201

the past few months, people tend to reach out to us. We are a source of capital stability, we view ourselves as great partners, and you often have smaller emerging funds that value a partner,” says Stride Capital’s Rogers. “Our phones are ringing off the hook.” n

This survey does not aspire to cover all hedge fund seeding activity, just those deals completed by dedicated platforms and vehicles with pools of capital dedicated to seeding. To be eligible, said vehicles should include external investment or be prepared to open to outside investment. The information in this survey has been collated from interviews with industry experts and in-house research. For those firms in the dry powder rankings for which ticket sizes for completed deals were unavailable, the average ticket size was calculated by HFMWeek and subtracted from the allocated total available. The survey covers the 12 months from November 2014 through October 2015.

27NEW JERSEY STATE INVESTMENT COUNCILPENSION (US)

Total fund AuM: $81bn Hedge fund AuM: $8.9bn Key figure: Chris McDonough (pension director)

New Jersey edges out neighbouring scheme New York City Retirement Systems as one of the most powerful hedge fund investors among US public pensions. In 2014 the $81bn scheme commit-ted $1.35bn to 11 funds and FoHFs, ending the year with a diversified portfolio of more than 40 funds.

25THE ALL PENSIONS GROUP (APG)

PENSION (NETHERLANDS)Total fund AuM: $451bn Hedge fund AuM: $20.6bn Key figure: Paulus Ingram (head of hedge fund invest-ments)

Following the decision of its Dutch counterpart PFZW to pull out of hedge funds in January, APG has shown no signs of diminishing its interest in the space. A champion of good govern-ance and responsible invest-ment, APG is involved in the

its investment committee is expected to agree on a long-term strategy.

29KOREA NATIONAL PENSION SERVICE (NPS)

PENSION (SOUTH KOREA)Total fund AuM: $428bn Hedge fund AuM: $2.1bn Key figure: Wan-Sun Hong (CIO)

The NPS’s decision last month to commit 0.5% of its assets to hedge funds may appear a somewhat tentative step, but given the gargantuan size of the scheme this will make it one of the biggest allocators in the region.

30 CALIFORNIA STATE TEACH-ERS’ RETIREMENT SYSTEM (CALSTRS)

PENSION (US)Total fund AuM: $190.8bn Hedge fund AuM: $864m Key figure: Christopher Ail-man (CIO)

At the end of 2014 Calstrs extended by a year its hedge fund experiment that it had begun in 2011, showing there are still big Californian pensions interested in hedge funds post-Calpers. The $191bn scheme will now continue investing in hedge funds until September or November this year when

28CONSULTANT (US)

Hedge fund AuA: $30bn Hedge fund AuM: $2.8bn Key figure: Peter Hill (pic-tured, global head of liquid alternatives)

Chicago-headquartered Aon Hewitt is a stalwart general investment consultant and has a solid base of hedge fund-investing clients in both the US and Europe. Its discretionary business has grown in recent years, helping provide more of its smaller investor clients with access to the hedge funds universe.

AON HEWITT

HFMWeek’s Investor Power 30 returns for its third instalment, presenting 30 of the most influential hedge fund investors and advisers. As always, comparing influence in the industry has proved a tricky and highly subjective activity, but discussions with prime brokerage executives and hedge fund professionals, combined with HFMWeek’s editorial nous and a survey of our readers, have helped us derive a countdown of the players whose opinions and decisions carry the most clout.

Two influential pension funds with sizeable hedge fund allocations (Calpers and PFZW, with allocations of $4bn and $5bn respectively) have pulled out of the space since the publication of last year’s list. However, initial fears from some that an avalanche of institutional investors would make copycat redemptions have not been realised – indeed, a (different) Californian public pension and Dutch scheme both figure in this year’s countdown.

We hope this year’s ranking will stimulate as much debate and discussion as last year’s.

FEATURE INVESTOR POWER 30

1 0 H F M W E E K . CO M

HFMWEEK REVEALS WHO’S MADE THIS YEAR’S INVESTOR POWER 30 LIST AND WHAT THEY ACHIEVED IN 2014 BY CHRIS JOSSELYN

30POWER2015

UNPRI hedge fund working group and the Hedge Fund Standards Board.

24GOLDMAN SACHS HEDGE FUND STRATEGIES

FOHF/SEEDERHedge fund AuM: $23.3bn (2014 figure) Key figure: Michael Schmelzer (global portfolio manager)

Goldman has a strong repu-tation and long track record as an influential FoHF and seeder, and its own Hedge Fund Select platform boasts a strong line-up following a flurry of new names at the beginning of last year.

23TEACHERS’ RETIREMENT SYSTEM (TRS) OF TEXAS

PENSION (US)Total fund AuM: $126bn Hedge fund AuM: $10.1bn Key figure: Britt Harris (CIO)

Texas TRS slips down the list from seventh position last year after its decision to reduce its hedge fund allocation by 1% to 8% last September, days after CalPERS’ announcement that it would fully redeem

from hedge funds. However, for the moment it remains one of the biggest hedge allocators among US public pensions.

22AXA INVESTMENT MANAGERS

FOHF (FRANCE)Total fund AuM: $639bn Hedge fund AuM: $8.2bn Key figure: Eric Lhomond (head of fund of hedge funds, impact and thematic investment)

AXA’s FoHF business made a name for itself providing cus-tomised solutions for clients. Furthermore, the struc-tural changes within AXA that have resulted in the insurer’s long-only and hedge fund teams working within the same group have created a number of synergies.

21CANADIAN PENSION PLAN INVESTMENT BOARD (CPPIB)PENSION (CANADA)

Total fund AuM: $190.8bn Hedge fund AuM: $12bn Key figure: Edwin Cass (chief investment strategist)

Following the establish-ment of its own in-house hedge fund last year, CPPIB

and Kerrin Rosenberg (co-founders)

Anglo-Dutch outfit Cardano has only been around since the turn of the mil-lennium but it has already firmly established itself as a big name among investment consultants. Furthermore, its clients often have high allocations to hedge funds, across a spectrum of managers from big to small firms.

17FUTURE FUNDSOVEREIGN WEALTH FUND (AUSTRALIA)

Total fund AuM: $85.1bn Hedge fund AuM: $11.9bn Key figure: David George (head of debt & alternatives)

Australasia’s biggest hedge fund allocator, the Future fund, has a whopping 14% of its assets in hedge funds, and David George, its head of debt & alterna-tives, has been vocal in addressing concerns of investors in hedge funds in his role on the Hedge Fund Standard Board of trustees.

16TOWERS WATSON

CONSULTANT (US)Hedge fund AuM: $21.6bn Key figure: Damien Loveday (head of hedge fund research)

With a large number of corporate pension clients, Towers Watson is known for transforming its clients’ hedge fund portfolios by seeking value and hidden returns. Its focus on the smart beta concept has made it popular with some large investors who have become frustrated with the performance and cost of their conventional hedge fund holdings.

26FOHF (US)

Hedge fund AuM: $21.4bn Key figure: Mustafa Jama (pictured, CIO)

Morgan Stanley AIP’s hedge fund team is a sizeable player, with over $21bn under management and ad-visement combined, offering investors both multi-strategy and strategy-specific hedge fund portfolios. Raising $500m for its AIP Strategic Opportunities Fund I last year has put a new vehicle at its disposal to invest in hedge fund secondaries and co-investments.

MORGAN STANLEY ALTERNATIVE INVESTMENT PARTNERS

has taken its hedge fund investing to a new level, building on its already glob-al team spread across North and South America, Europe and Asia, making it one of the biggest public pension hedge fund investors in North America.

20VARMA MUTUAL PENSION INSURANCE COMPANYPENSION (FINLAND)

Total fund AuM: $44bn Hedge fund AuM: $7.48bn Key figure: Jarkko Matilainen (head of hedge funds)

Last year Varma, which is the largest Scandinavian hedge fund investor, upped its hedge fund allocation by 5%. Varma has been prominent in its use of ESG guidelines in its hedge fund investments, and this year will start sending a responsible investment policy to all its existing and prospective managers.

19MESIROW ADVANCED STRATEGIES

FOHF (US)Hedge fund AuM: $13.7bn Key figures: Tom Macina (CEO), Steve Vogt (CIO)

A number of capital introduction sources spoke of Mesirow’s clout. The vast majority of its assets derive from institutional investors, and it is particularly known as being one of the biggest FoHF havens for pension fund money.

18CARDANOCONSULTANT (UK/NETHERLANDS)

Hedge funds AuA: $5bn Hedge funds AuM: $5bn Key figures: Theo Kocken

H F M W E E K . CO M 11

1 Albourne Partners2 Cambridge Associates3 Aksia4 Cliffwater5 Mercer

TOP 5 CONSULTANTS

15PERMAL GROUPFOHF (US)

Hedge fund AuM: $22bn Key figures: Omar Kodmani (CEO), Clark Fenton (co-CIO), Robert Kaplan (co-CIO)

Permal has continued to build on the back of its 2012 acquisition of Fauchier Part-ners. The Permal managed accounts platform now comprises 103 accounts and $9.4bn of assets, following the launch of its innovative $4bn Irish Collective Asset Management Vehicle (Icav) in March – one of the first to be authorised under new Irish legislation.

14ONTARIO TEACHERS’ PENSION PLAN (OTPP)PENSION (CANADA)

Total fund AuM: $113bn Hedge fund AuM: $10.5bn Key figures: Ron Mock (CEO), Neil Petroff (CIO – retiring in June)

OTPP is one of the largest pensions in Canada and also one of the largest alternatives investors in Europe, where it is active in pursuing hedge fund op-portunities. CEO Ron Mock, a former hedge fund man-ager himself, reaffirmed the scheme’s commitment to continue investing in hedge funds in January.

13CHINA INVESTMENT CORPORATION (CIC)SOVEREIGN WEALTH FUND (CHINA)

Total fund AuM: $652.7bn Hedge fund AuM: $26bn Key figure: Roslyn Zhang (managing director, fixed income and absolute return investments)

CIC is the second biggest sovereign wealth fund in the world and is by far the biggest hedge fund alloca-tor in Asia. Since shifting to an ‘endowment model’ of investing in 2012, it has had a more alternatives-heavy allocation strategy, and has taken a keen interest in European hedge funds.

12MERCERCONSULTANT (US)

Hedge funds AuA: $30.5bn Hedge funds AuM: $37.7bn Key figure: Bill Muysken (global CIO – alternatives)

Marsh & McLennan subsidiary Mercer is highly respected in the hedge fund world on both the advisory and discretionary side. Investors particu-larly like the consultant’s stance on fees – Mercer reportedly negotiates down management fees in around half of the hedge fund transactions it is involved in.

11GOVERNMENT OF SINGAPORE INVESTMENT CORPORATION (GIC)SOVEREIGN WEALTH FUND(SINGAPORE)

Total fund AuM: $320bn Hedge fund AuM: $9.6bn Key figure: Lim Chow Kiat (CIO)

The $320bn Singapo-rean sovereign has been investing in hedge funds since 2008 and is thought to be actively allocating to the space. Ray Dalio’s Bridgewater is one hedge fund to have significantly benefited from GIC invest-ment. CIO Lim Chow Kiat was responsible for growing GIC’s European investments before taking over the top role in 2013.

07HARVARD MANAGEMENT COMPANYENDOWMENT (US)

Total fund AuM: $36.4bn Hedge fund AuM: $5.8bn Key figure: Stephen Blyth (president and CEO)

Harvard has upped its hedge fund allocation by one percent to 16%, cementing its place as a hedge fund investor with clout. Its hedge fund invest-ments seem little impacted by the surprise departure of former CEO Jane Mendillo last year.

06CAMBRIDGE ASSOCIATESCONSULTANT (US)

Hedge fund AuA: $39.1bn Hedge Fund AuM: $3.7bn Key figures: Gerald Kraus (hedge fund consulting practice director), Gordon Barnes (head of business risk management)

Cambridge is coveted by many hedge funds as the specialist consultant for US endowment and foundation money. However, Cambridge also advises a range of other investors, including pensions, and its burgeon-

09ENDOWMENT (US)

Total fund AuM: $23.9bn Hedge fund AuM: $4.16bn Key figure: David Swensen (pictured, CIO)

Legendary hedge fund investor CIO David Swensen and his team continue to be a force in the space – but he warned this year that in future the endowment may not be able to match the exceptional returns hedge funds have delivered over the past 20 years, which have seen its assets swell from less than $3bn in 1985 to almost $24bn in 2014.

YALE UNIVERSITY

10CLIFFWATERCONSULTANT (US)

Hedge fund AuA: $40bn (2014 figure) Key figure: Stephen Nesbitt (CEO)

Cliffwater continues to build its hedge fund client book, which already comprises some of the biggest US pen-sions that invest in hedge funds. Last year it added our new entrant, the $81bn New Jersey State Investment Council, to its roster.

08AKSIA

CONSULTANT (US)Hedge funds AuA: $58bn Key figures: Jim Vos (CEO), Bruce Ruehl (head of portfolio advisory, Americas), Valérie Bénard (head of Aksia Europe)

Aksia has recently added Ohio Public Employees’ Retirement System (Opers) to its non-discretionary roster and has been vocal in advocating hedge fund transparency – such as when it advised clients against investing in a BlueCrest fund due to transparency concerns.

FEATURE INVESTOR POWER 30

1 2 H F M W E E K . CO M

1 Suva2 Ontario Teachers’3 Varma4 CPPIB5 Texas Teachers’

PENSIONSTOP 5

ing discretionary business is becoming more high-profile over time.

05SUVA

INSURANCE/PENSION (SWITZERLAND)

Total fund AuM: $50bn Hedge fund AuM: $5bn Key figures: Christoph Bian-chet (head of asset alloca-tion), Matthias Ramser (head of portfolio management)

Several capital introduction sources described Suva as the talisman hedge fund allocator on the continent, which has proved itself to be both sophisticated and reliable as an investor. The Swiss National Accident Insurance Company’s $50bn in assets comprises the company balance sheet and the Suva employee pension fund. They are sticky investors, preferring to stay with managers for at least two years, are fee-sensitive, and manage all their hedge fund alloca-tions in-house, without consultants.

04MAN FRMFOHF (US)

Hedge fund AuM: $11.3bn Key figures: Keith Haydon (CIO), Matthew Stadtmauer (president)

Man FRM has bolstered its position as a power-ful hedge fund investor through two high-profile acquisitions in the past year. Last August’s acquisi-tion of $1bn credit-focused FoHF Pine Grove was fol-lowed up with the purchase of a $1.2bn portfolio of multi-strategy and strategy-focused FoHFs from Merrill Lynch Alternative Invest-ments’ in December. FRM’s managed account platform boasts an AuM of $7.6bn.

03SOVEREIGN WEALTH FUND (UAE)

Total fund AuM: $773bn Hedge fund AuM: $38.5bn Key figures: Khalifa Al Mheiri (head of alternatives)

While the mysterious Adia would not confirm its exact current exposure to hedge funds to HFMWeek, its es-timated $38.5bn allocation makes it the largest hedge fund investor around. It is thought to have leeway to invest up to 10% of its huge (and ever-growing) assets in hedge funds, and has been active in the space for almost 30 years. With a large in-house team focusing on hedge fund and commodity invest-

ments, Adia said it was “very positive about the unique and strategic role

that hedge funds play in Adia’s overall portfolio”, in a review last year.

ABU DHABI INVESTMENT AUTHORITY (ADIA)

01FOHF/SEEDER (US)

Total fund AuM: $290bn Hedge fund AuM: $64bn Key figures: Tomilson Hill (pictured, president and CEO), Halbert Lindquist (chief investment strategist)

HFMWeek hates to be boring, but the taker of the top spot may not come as that much of a surprise to readers who remember last year’s list – nor is it to the capital introduction sources we spoke to – as Blackstone is number one for the second year in a row. The New York-headquartered group seems to go from strength to strength. The world’s biggest discretionary allocator to hedge funds has an AuM of $64bn in the space – up more than 14% on last year. What’s more, Blackstone committed around $600m to seeding hedge funds in 2014, making it one of the most powerful presences in the hedge fund seeding space.

02 CONSULTANT (UK)

Hedge fund AuA: $350bn Key figures: Simon Ruddick (pictured, co-founder and CEO – stepping down in August), John Claisse (partner and incoming CEO), Guy Ingram (head of hedge fund research and co-founder); Sam Lewis (co-founder and mayor of Albourne Village)

Albourne continues to be the go-to hedge fund invest-ment consultant for big al-locators, many of whom like its straightforward fee struc-ture and refusal to go in for discretionary work. Around 550 funds, with a combined AuM of $1.2bn, now report on Opera, the risk reporting system it has spearheaded, and while some managers complain that Albourne’s influence has grown too big, its momentum shows little sign of slowing.

ALBOURNE PARTNERS

BLACKSTONE ALTERNATIVE ASSET MANAGEMENT

H F M W E E K . CO M 13

1 4 H F M W E E K . CO M

ANALYSIS CLEARING COSTS

The host of rules being implemented to regu-late the global financial system have been well-documented and discussed. But there is a growing sense that the regulatory aims of preventing systemic risk and moving to mandatory clearing – in the form of Basel

III, Dodd-Frank and Emir – are not necessarily in sync and are making the clearing business increasingly costly for providers.

“The clearing business is one of several businesses be-ing challenged by the regulations around capital and lever-age,” the European head of clearing at one top-10 ranking futures commission merchant (FCM) tells HFMWeek.

“MAJOR HEADWINDS”Basel III, and the equivalent G-Sib rules in the US, require banks to hold a minimum amount of Tier 1 capital and

additional capital buffers, as well as requiring institutions to meet new risk requirements regarding their central counterparties through the leverage and supplementary leverage ratios.

Meanwhile, Emir and Dodd-Frank are focused on the mandatory central clearing of standardised OTC deriva-tives, a move that is operational in the US but not yet in Europe or Asia.

In a recent analysis on clearing, UBS described Basel III’s risk-weighted asset requirements and leverage ra-tios as a “major headwind” to the expansion of clearing operations, while in February JP Morgan CEO Jamie Di-mon warned in the bank’s annual report that its clearing business faced “particularly acute” uncertainty around the extra capital required.

Goldman Sachs has gone one step further and intro-duced a fee hike of up to 75bps on margin (a 25bps main-tenance charge for non-cash margin and an additional 50bps for cash) in response to the regulatory costs they now face and industry observers expect others to follow.

CAPITAL AND RISK LEVERAGE RATIOSThe capital and leverage ratios that banks are required to adhere to make clearing expensive at best, and unwork-able at worst, industry participants indicate.

“To comply with the risk-weighted asset calculations, banks are reviewing their balance sheet consumption and return and they have to drill down per client to cal-culate what return on equity a client provides and what their consumption of balance sheet is,” explains Gildas Le Treut, global director prime clearing services at ABN Amro Clearing.

London-based financial markets consultancy Catalyst

TO COMPLY WITH THE RISK-WEIGHTED ASSET CALCULATIONS, BANKS ARE REVIEWING THEIR BALANCE SHEET CONSUMPTION AND RETURN, AND THEY HAVE TO DRILL DOWN PER CLIENT

” GILDAS LE TREUT, ABN AMRO CLEARING

HOW CAN YOU KEEP YOUR CLEARING COSTS UNDER CONTROL?Global regulations are putting significant pressure on a traditionally profitable service for the banks BY JASMIN LEITNER

H F M W E E K . CO M 15

estimates that clearing brokers and futures commission merchants now need to make a return on capital of 14%-15% to cover the cost of capital.

Banks that separate clearing from their broader invest-ment banking or prime brokerage units have found the business is not profitable enough to meet return-on-eq-uity (RoE) hurdles, Le Treut adds.

“When regulators came out and said there was going to be a central clearing mandate, people thought there would be a lot of flow from the OTC side which would make a huge amount of money, but as it turned out, be-cause of the different risk profiles and the sheer numbers involved to build out the business, it has proved to be very difficult to make money,” Radi Khasawneh, research analyst at Tabb Group, notes.

This has already led some players, such as RBS, State Street, BNY Mellon and Nomura to shrink their OTC clearing capabilities or close them completely.

Those that remain in the business emphasise the im-portance of infrastructure and scale, with RoE hurdles playing a key role for banks in deciding which clients to service.

“You need a significant amount of scale to generate the returns required and you have to be incredibly dis-ciplined in risk and expense management to create the pipes and plumbing to provide that,” says Chris Perkins, Citi’s global head of OTC Clearing.

“Historically, the money wasn’t in how much you charged to clear a transaction but in the cash collateral, or margin,” explains Mark Haas, former head of Deutsche Bank prime services and founding partner of hedge fund consultancy Nekton Partners.

“Customers would put up the cash as margin, and even though banks didn’t have access to it, they controlled where it was deposited, so if the money could earn 4%, maybe they paid the client 3.8%,” he says. “It was in the interest carry where the profitability was.”

However, ultra-low interest rates have cut off this reve-nue stream and new regulations are increasing the burden of such functions.

The leverage ratio divides total exposure by tier 1 capi-tal. The proposed calculation includes initial margin and off-balance sheet exposures such as notional and poten-tial future exposure (PFE) of derivatives, increasing the amount of capital banks need to hold.

For banks adhering to G-Sib, the ratio is even greater, with the supplementary leverage ratio (SLR) applying additional buffers of up to 2.5% to US banking entities of a certain size on top of the minimum 3% applicable under Basel III.

PFE is based on an add-on factor linked to the underly-

ing asset class of a derivative. “The PFE add-on for non-investment grade credit default swaps (CDS) is 10%, and for high grade CDS is 5%, while interest rate swaps (IRS) is between 1.5% and 0%,” says Wells Fargo’s George Si-monetti, head of markets clearing & futures execution.

He adds that CDS is treated worst within the OTC space while commodities futures face an even harsher ap-plication of up to 15% (see table below).

The leverage ratio doesn’t take into account the fact that segregated initial margin, which can’t be re-hypoth-ecated by banks, reduces the risk that banks and central counterparty clearing houses (CCPs) are exposed to, al-though clearing heads say there may still be some relief as a result of industry lobbying on this point.

In response to industry feedback, the Basel committee agreed in March 2014 to adopt a new calculation method for counterparty credit risk. The standardised approach for measuring counterparty credit risk (SA-CCR) takes into account collateral and netting agreements and recog-nises the exposure-reducing effect of margin.

SA-CCR will be used within the capital adequacy ratio, and it could also be used within the leverage ratio, with CFTC chair Tim Massad referring in a speech last month to discussions with bank regulators around the industry’s concerns.

“If you were to include this in those calculations it would greatly help reduce the SLR and that’s why you’ve seen all the lobbying going on in the industry,” Simonetti says.

“[Including the SA-CCR] would definitely give FCMs a fair bit of relief on cleared trades,” the COO at an $8bn-plus New York credit hedge fund adds.

“I think people are making the case to the regulators that if the goal is to have things cleared, it’s stupid to have rules in place where capital needs to be held against IM and a return needs to earned on that when the whole point of IM is to bring risk down in the system.”

FEES, SPREADS AND SYSTEM OUTSOURCINGAlthough the leverage calculation may still be tweaked, and doesn’t come into force until 2018, banks have had to start reporting the ratio already.

“Until [there is clarity], banks will try to optimise and selectively re-price although I’m not sure everyone is tak-ing a blanket approach,” the European clearing head at the top-10 ranking FCM says.

Wells Fargo has significant balance sheet capacity and is looking to push forward in OTC and futures clearing. But nonetheless pricing is still a focus with new and exist-

HISTORICALLY, THE MONEY WASN’T IN HOW MUCH YOU CHARGED TO CLEAR A TRANSACTION BUT IN THE CASH COLLATERAL, OR MARGIN

” MARK HAAS, NEKTON PARTNERS

PFE ADD-ON FACTORS

Remaining maturityInterest rates

FX and gold Equities

Precious metals (except gold)

Other com-modities

1 year or less 0.0% 1.0% 6.0% 7.0% 10.0%

Over 1 year to 5 years 0.5% 5.0% 8.0% 7.0% 12.0%

Over 5 years 1.5% 7.5% 10.0% 8.0% 15.0%

SOURCE: DAVIS POLK

16 H F M W E E K . CO M

ANALYSIS CLEARING COSTS

ing clients, Simonetti says. “We look at a range of factors to determine what to charge clients including initial mar-gin, volumes, the type of business and the overall nature of each client relationship.”

For Citi, one of the ways to enhance profitability is by not taking a spread, adds Perkins. “We realised we could reduce the balance sheet by essentially being a pass-through agent, not taking a spread on the return from the CCP and passing it to the client.”

This, combined with the use of maintenance and ticket fees, makes the business profitable, he argues.

Other banks such as Barclays, which with over $6.7bn in segregated customer funds is the third largest FCM globally according to CFTC data, have opted to out-source some of their clearing operations.

In March this year, Barclays signed a deal with Sun-Gard, using the technology firm for aspects such as day-to-day technology, reconciliation and CCP connection to cut costs by 20%.

PORTFOLIO COMPRESSION AND OPTIMISATIONAn increase in clearing costs is inevitable, prime brokers say, although the European clearing head stresses that pricing conversations are the last option.

“We‘re doing as much as we can to reduce the impact where possible – we’ve done a lot of things around blend-ed compression to optimise portfolios and reduce their notional exposure,” he says.

A plethora of firms have emerged providing compres-sion software for banks and managers as well as consult-ing services around how managers can utilise the netting and compression tools in the market.

Portfolio netting allows managers to effectively elimi-nate trades that are perfectly economically opposite, while risk-constrained compression looks to achieve the most efficient net risk expression in the fewest amount of trades with the smallest amount of notional exposure, explains Stephen Loosley, a partner at Catalyst.

For strategies trading IRS, such as global macro or fixed income arbitrage, such processes can save managers mil-lions in clearing and execution fees, Catalyst estimates.

Compression isn’t a catch-all solution, Loosley admits. “The biggest variable in how successful a compression event is relates to the number of trades you put in.”

Trade type and frequency mean compression isn’t suit-able for everyone. “If you’re making directional bets or have largely static positions there’s not much offsetting [to be done],” adds Nekton’s Haas.

“You could have rates derivative transactions to hedge the interest rate risk component of a corporate credit book, and there’s not going to be any consolidation there.”

As with the wider balance sheet pressures banks face across all business lines, clients are expected to optimise, or concentrate, their wallets.

“You have to question [the idea of] having more than one PB, and investors have to get used to the fact that at the moment, maybe one PB is all you can afford because you have to subsidize the business through your whole relationship,” the COO at one $2bn relative value hedge fund explains.

He adds that while a number of smaller, or non-bank, players may try to fill the gaps in the OTC clearing space, this is not without dangers either.

“I worry that smaller entities coming into the fray and picking up the slack may actually create more counter-party systemic risk.”

LIQUIDITY “The issue for the buy side is whether liquidity improves if your product starts to clear – it’s one thing if your clear-ing costs are going up if your trading desk says wow, this is a lot more liquid, I’m happy with that, and another if that’s not the case,” the $8bn New York firm COO con-tinues.

One way to mitigate the punitive treatment of cash on bank balance sheets is for hedge funds to post se-curities and other alternatives as margin, managers tell HFMWeek, although this in itself can create liquidity is-sues.

“As banks start saying they don’t want cash to be posted as margin, it forces the market to look at buying securities, which will increase their cost, particularly as demand for T-bills goes up,” the COO at the $2bn UK-based firm says.

Another option is the use of exchange-traded funds (ETFs), he says. “There are firms out there packaging up securities in ETFs to be posted as collateral,” he says, add-ing they would consider using them but would have to “ascertain the risk.”

“We are trying to encourage the lending and borrow-ing of ETFs and are particularly focused on collateral ac-ceptability,” says Andrew Jamieson, head of EMEA client execution and broker-dealer sales within iShares’ capital markets group, a subsidiary of BlackRock.

“We’re having ongoing dialogue with a number of the leading CCPs and exchanges,” Jamieson says, adding that for hedge funds and prime brokers, ETFs provide a good collateral option as well as potentially providing a broad-er solution to the issue of cash management.

“We’ve received some requests from banks and asset managers about whether an ETF would qualify as collat-eral and could be used as part of a bank’s liquidity ratio,” says Fabrizio Palmucci, executive director, fixed income specialist at Source ETFs.

But while the ETF community is keen to see its prod-ucts take on a broader range of uses, such as collateral, not all CCPs accept them. CME Group accepts certain ETFs and other cash alternatives such as gold, whereas LCH.Clearnet doesn’t.

“It is vital that all collateral taken by a CCP can reliably be sold into liquid secondary markets even during times of stress,” says Philip Whitehurst, director of product, SwapClear, at LCH.Clearnet.

Palmucci and Jamieson both emphasise the need for all participants to do due diligence, with scale of product, liquidity, underlying asset representations and methodology used in an ETF all criteria to be considered.

WE REALISED WE COULD REDUCE THE BALANCE SHEET BY ESSENTIALLY BEING A PASS-THROUGH AGENT, NOT TAKING A SPREAD ON THE RETURN FROM THE CCP AND PASSING IT TO THE CLIENT

” CHRIS PERKINS, CITI

One perhaps unforeseen effect of the huge wave of new regulations to hit the sector since the financial crisis is the number of senior regulatory staff leaving to join hedge funds.

With firms having to deal with the impact of sprawling new requirements triggered by the likes of Dodd-Frank and the AIFMD and a massive in-crease in scrutiny, many firms have found poaching from the regulator the best route to beefing up their compli-ance operations.

And while taking on staff with intimate inside knowl-edge of a regulator’s operations can be a huge benefit to the firms involved, some experts also highlight the ethi-cal questions raised as the revolving door between the regulator and the regulated spins faster and faster.

As HFMWeek research illustrates, major hedge funds including Bridgewater Associates, Citadel Advisors, Och-Ziff Capital Management, Davidson Kempner, Coatue Management and Paulson & Co all employ ex-regulatory officials in senior compliance positions.

In some cases these hires are a major coup, such as $101.6bn asset manager KKR hiring Bruce Carpati as its global CCO after 13 years at the SEC, including heading up its asset management unit since its inception in 2010.

However, the practice is not without controversy, with critics pointing out that serious ethical questions

should be raised if you have large numbers of staff join-ing the SEC in the expectation that they will at some point move to some of the firms they are regulating to improve their pay levels.

“Of course that happens,” says a lawyer who advises hedge funds but did not wish to be named.

“But there is nothing wrong with that because while those people are at a regulator they do a good job. Com-pensation is obviously much lower in the public sector and you can understand once people have families they might not be lifelong public sector servants when pay is much better in the private sector.”

For hedge funds meanwhile, there are several key ben-efits to hiring ex-regulators.

Ex-regulators arrive with intricate knowledge of the existing compliance landscape, the ability to create a framework to protect a fund from it and, while hard to value, ongoing personal relationships with people still employed by regulators.

Marc Elovitz, partner at Schulte, Roth & Zabel, says the introduction of the Dodd-Frank Act in 2010 has ac-celerated this trend through a combination of the grow-ing compliance burden placed on hedge funds, and the restrictions placed on big banks – which he says were previously significant employers of ex-regulators.

“The compliance load used to be more manageable for the average hedge fund, but now the amount of resource

THE REGULATORS GOING HEDGE FUND NATIVE

HFMWeek research highlights the large numbers of ex-regulatory individuals walking through the revolving door to work for hedge

funds BY ALEX CARDNO AND SAM DALE

ANALYSIS REGULATORS

H F M W E E K . CO M 17

BRUCE CARPATI CURRENT: global CCO, KKR, 2014 – present PAST: Head of asset management unit, SEC, 2000-2013

BEN BERNANKE CURRENT: Senior advisor, Citadel, May 2015 – present PAST: Chairman of Federal Reserve, February 2006 – February 2014

DAVID MCCORMICK CURRENT: Co-president, Bridgewater, 2009 – present PAST: Previous: Under-secretary of treasury for international affairs, 2007-2009

HELENE GLOTZER CURRENT: CCO, Bridgewater, June 2008 – present

PAST: Associate regional director/co-head of enforcement, SEC New York regional office, November 2004 – May 2007

DAVID BECKER CURRENT: CLO/CCO, Och-Ziff, July 2014 – present PAST: GC and senior policy director, SEC, 2009-2011

ERIK KOMITEE CURRENT: GC, Viking Global, 2008 – present PAST: Assistant US attorney, Eastern District, New York, 2000-2007

MATTHEW BLOOM CURRENT: CCO / assistant GC, Viking Global, 2013 – present PAST: Law clerk, Chicago, US court of appeals, 2008-2009

JAMES GANGE CURRENT: MD/CCO, Davidson Kempner, April 2009 – present PAST: Senior counsel, SEC, 1999-2004

MARTIN TOWEY CURRENT: CCO, Fir Tree Partners, November 2010 – present PAST: Staff accountant, SEC, 2000-2007

SEAN FARRELL CURRENT: CCO, Greenlight Capital, April 2011 – present

PAST: Staff accountant, SEC, October 2003 – June 2006

NEIL SCHWARTZ CURRENT: CCO/associate counsel, Tiger Global Management, March 2011 – present PAST: Senior counsel, SEC, 2001-2006

STUART MERZER CURRENT: GC/CCO, Paulson & Co PAST: Senior compliance examiner, SEC, 1990-1995

DOUG ANDERSON CURRENT: CCO, Canyon Capital, 2005 – present PAST: senior securities compliance exam-iner, Pacific Regional Office, SEC, until 2005

SHAHLA ALI CURRENT: CCO, Carlson Capital, Jan 2011 – present PAST: Assistant Attorney General, NYS Attor-ney General’s Office, July 2004 – May 2007

COLLEEN LYNCH CURRENT: GC, Coatue Management, March 2013 – present PAST: Assistant regional director, market abuse unit, SEC, July 2003 – March 2013

ZACHARY FEINGOLD CURRENT: Deputy GC and CCO, Coatue Management, 2014 – present

PAST: Assistant US attorney, US Attorney’s Office, Southern District of New York, 2008-2014

STEVEN WEISER CURRENT: CCO/head of litigation, Silver Point Capital, January 2011 – present PAST: Assistant US attorney, US Attorney’s Office, October 2001 – April 2007

AJAY MEHRA CURRENT: CCO, Caxton Associates LP, June 2011 – present PAST: Senior counsel, SEC, June 1997 – September 2000

ADAM FINGER CURRENT: GC, Balyasny Asset Manage-ment, July 2006 – present PAST: Assistant district attorney, New York County District Attorney’s Office, 1996-2002

DAVID GOLDENBERG CURRENT: SVP and assoc. general counsel, McGraw Hill Financial; Chief Legal Officer, S&P Capital IQ PAST: Branch chief, senior counsel at SEC, 1994-1996

MICHAEL LOUGHNEY CURRENT: Global head of legal and compli-ance, Ivaldi Capital PAST: Senior trial attorney, CFTC, 1994-1998

US REVOLVING REGULATORS

hedge funds have to spend on compliance has really grown,” he explains.

“Having people involved with the fund who have gov-ernment or regulatory experience can help to manage that load and bring insight into the way regulators ap-proach those things.”

George Mazin, partner at law firm Dechert, adds: “Those individuals may also have some built-in credibil-ity and goodwill with regulators that is invaluable to a hedge fund.

“Also, with any of the rules, part of the requirements are written and can be viewed in a rule book, but so much is also unwritten so someone with up-to-date knowledge of all the requirements is clearly valuable.”

As it stands, senior ex-SEC employees are subject to a one-year “cooling-off” period, while federal employees (for example District Attorney prosecutors) are subject to the same arrangement by federal conflict of interest law.

As recently as August 2013, the SEC’s ethics counsel Shira Pavis Minton called for the cooling-off period to be extended to any regulatory employee making more than $155,440.50 a year – where previously it only ap-plied to very senior people such as department heads – but this was withdrawn in a final ruling by the Office of Government Ethics on 2 January 2014.

In any case, the cooling-off period simply prohibits

ex-staff from representing their new employer to the SEC for a year after their exit. For many hedge funds, there is an easy way around this.

“These people are not typically representing the funds they work for as external counsel,” explains Elovitz. “In-stead, these people will be coming up with internal poli-cies and processes to protect the fund.”

While the US has long had a revolving door, UK com-pliance consultants and hedge funds are also raiding the regulator for expertise and paying much higher salaries to attract the best talent.

Recent high-profile UK poachings include FCA head of asset management Ed Harley leaving to join Goldman Sachs Asset Management last year. Heads of compliance at CQS, TCI Fund Management, Brevan Howard and Po-lar Capital have all previously held jobs with UK regula-tory organisations.

“It’s very common in the US that skilled individuals get poached from the regulator for higher pay in the pri-vate sector,” says Neil Robson, partner at Katten Muchin Rosenman.

“It has definitely been happening in Europe and we are bound to see it happening more and more. Compli-ance consultants and regulated firms are always looking for skilled compliance professionals and the fact that they probably pay more than the regulator may be sufficient inducement for them to be poached from the regulator.”

ANALYSIS REGULATORS

1 8 H F M W E E K . CO M

He adds: “Unless they really want to remain in a reg-ulatory role as the ‘policeman’, the offer of more money will always be appealing. The answer appears to be the regulator would have to pay more to retain key person-nel, though this may not be possible.”

For any criticism voiced about this, the contention remains an ethical one, not a legal one. As Kay Gordon, partner at Drinker, Biddle & Reath explains, there are issues to consider in hiring ex-regulators, but so far on the fund side it has not presented a significant problem.

“Hiring people with inside information or those in-volved in the investigation of a fund is risky as far as the potential for that information to be shared, and there are some possible bad consequences there,” she explains.

“But I have not seen any major violations among funds employing ex-regulators that could be proven or identified. The fact so many people have left regula-tors and there has not been a major issue with the funds they have gone to suggests it is not a problem.”

As well as ethical concerns, lawyers say poaching can leave regulators short on skills. For example, in January 2012 the FCA lost its AIFMD technical specialist Giles Swann to consultant ICI Global.

“For a time, Giles Swan was the FCA’s man with his finger on the pulse of AIFMD implementation,” says Katten’s Robson. “He was a high-profile poaching and there is a sense that when he did leave, many at the FCA had to suddenly start learning again because he had been a repository of core ideas and information.”

In March 2014 the National Audit Office warned high staff turnover risked undermining confidence in the FCA. In its annual report, published in July, the regulator said it was continuing to review staff turnover rates after 10% of staff left in 2013.

MOANA MOORE CURRENT: Global head of compliance, CQS, 2014 –present PAST: Assistant manager, Financial Services Compensation Scheme, 1995-1998

RYAN TAYLOR CURRENT: Head of compliance, Brevan Howard Group, 2013 – present PAST: FCA analyst 1997-2001; Bank of Eng-land policy team, 1995-1997

BOURA TOMLINSON CURRENT: Chief compliance and legal officer at Polar Capital, 2007 – present PAST: Enforcement manager, FSA, 2000-2007

ANGUS MILNE CURRENT: Director, risk and compliance at TCI, 2007 – present PAST: Manager, Investment Management Regulatory Organisation, 1994-1998; Man-ager at FSA, 1998-2004

MONICA COMYNS CURRENT: Chief compliance counsel, Lucidus Capital Partners, 2011 – present

PAST: FSA associate, General Counsel Divi-sion, 1999-2001

NICOLE BUTLER CURRENT: Compliance manager, Mako Global, 2015 – present PAST: Financial Ombudsman Service adjudi-cator, 2009-2011

MARK NORRIS CURRENT: Outsourced COO for hedge funds and founder of Altissima Consultants PAST: FSA Chief Operating Officer 2009-2010

DAN WATERS CURRENT: Founder of ICI Global advising the alternatives sector on regulation PAST: FSA Asset Management Sector Leader 2004-2010

ED HARLEY CURRENT: Goldman Sachs Asset Manage-ment head of asset management compli-ance, 2014 – present PAST: FCA head of asset management supervision 2007-2014

PAUL SHARMA CURRENT: Managing Director and Co-Head of the UK Regulatory Advisory Services Prac-tice at Alvarez & Marsal, 2014 –present PAST: Deputy head of the Prudential Regula-tion Authority, executive director for policy, 2013; Director of policy and deputy head of the Prudential Business Unit, 1999-2013

JEREMY HEALES CURRENT: Senior Director at Alvarez & Marsal, 2014 – present PAST: Head of department, retail banks, , FCA, 2013-2014; Head of design and implementation for new conduct regulator, FCA, 2011-2013

TANYA FARRELL CURRENT: GC and CCO, Coupland Cardiff Asset Management, 2014 – present PAST: Manager at Financial Services Com-pensation Scheme 1993-1999

SEBASTIAN FRIZZO CURRENT: Head of Regulatory Affairs at Lynx Asset Management, 2014 – present PAST: Legal Counsellor at Swedish Financial

Supervisory Authority

ARAFAT SHAH CURRENT: Founder of Augentius Compliance working with alternative managers, 2015 – present PAST: FSA associate 1999-2007

GILES SWANN CURRENT: Director of global funds policy, ICI Global, 2012 – present PAST: FCA technical specialist, including on AIFMD, 2005-2012

UK REVOLVING REGULATORS

NOTABLE MOVES TO SERVICE PROVIDERS AND TRADE BODIES

JONATHAN GEE CURRENT: Adviser, Investment Association, December 2014 – present PAST: Policy adviser, head of asset management and investment, HM Treasury, April 2010 – No-vember 2014

ADAM JACOBS CURRENT: Head of markets regulation, Aima, February 2013 – present PAST: Senior associate, policy associate at FCA, September 2006 – October 2010

REED BRODSKY CURRENT: Partner at Gibson, Dunn & Crutcher, April 2013 – present PAST: Assistant US attorney at US Attorney’s Office for the Southern District of New York, July 2004 – March 2013

DAVID VAUGHAN CURRENT: Hedge fund attorney at Dechert, August 2011 – present PAST: Senior private fund policy adviser, SEC, April 2009 – July 2011

PARVEZ KHAN CURRENT: Principal at IPK

European Strategy, August 2011 – present PAST: Associate, senior policy associate, FCA, April 2004 – June 2009

ANDREW SHRIMPTON CURRENT: Managing director, compliance consulting, Duff & Phelps, January 2015 – present PAST: FSA firm supervisor, May 1999 – May 2007

JOHN EVERETT CURRENT: Director, funds and fiduciary, Jersey Financial Services Commission, May 2014 – present PAST: Manager, technical specialist, asset management and funds, FCA, February 2002 – October 2012; October 2013 – March 2014

PETER MOORE CURRENT: Regulatory affairs and policy, HSBC, September 2013 – present PAST: FSA associate, February 1998 – September 1999

KATE WORMWALD CURRENT: Hedge fund documen-tation and legal consultant, Oesa,

2002 – present PAST: Senior consultant, FSA, 1999 – March 2002

LINDSEY SIMON CURRENT: Founder and CEO, Simon Compliance, July 2010 – present PAST: Senior attorney, SEC, Sep-tember 1998 – June 2002

SEAN O’MALLEY CURRENT: Senior vice-president and deputy general counsel, State Street Global Advisors PAST: SEC special counsel, senior counsel, January 1999 – May 2005

RON GEFFNER CURRENT: Vice-president, Hedge Fund Association, January 2010 – present PAST: Staff attorney, SEC, Septem-ber 1991 – August 1994

JEANETTE TURNER CURRENT: Managing director and general counsel, Advise Tech-nologies, January 2012 – present PAST: Law clerk,US Department of Justice, Criminal Division, January 1996 – August 1996

HANNAH SPENCER CURRENT: Senior consultant, Portman Com-pliance Consulting, specialising in hedge funds, 2014 – present PAST: Senior associate, FSA, focused on ARROW visits to asset managers, 2005-2008

WILL MORRELL CURRENT: Consultant, Cordium, 2014 – present PAST: Lead associate at FCA, specialising in Annex IV reporting, 2010-2014

H F M W E E K . CO M 19

HFM event highlightsDATE EVENT LOCATION

Nov European CTA Service Awards London, UK

Nov European CTA Performance Awards London, UK

Nov San Francisco Operational Leaders Summit San Francisco, US

Dec West Coast Liquid Alternatives Summit San Francisco, US

2016

Feb HFM Asia Operational Leaders Summit Asia

Feb European Hedge Fund Technology Leaders Summit UK

Feb Australia Hedge Fund Operational Leaders Summit Sydney, Australia

Feb Australia Allocator Intelligence Summit Sydney, Australia

Feb Ucits Summit US

Feb European Allocator Intelligence Summit UK

Feb HFM US Hedge Fund Technology Awards US

Feb Alternative Credit Services Awards US

Feb Alternative Credit Performance Awards US

Feb CTA US Performance Awards US

Feb CTA US Services Awards US

Mar Singapore Allocator Intelligence Summit Singapore

Apr European Hedge Fund Services Awards London, UK

Apr European Hedge Fund Performance Awards London, UK

May US Allocator Intelligence Summit US

Jun Dallas Hedge Fund Operational Leaders Summit Dallas, US

Jun US Hedge Fund Operational Leaders Summit US

Sep European Hedge Fund Operational Leaders Summit UK

Sep European Hedge Fund Legal Summit UK

Sep Asia Hedge Fund Performance Awards Hong Kong

Sep Asia Hedge Fund Services Awards Hong Kong

Sep European Allocator Intelligence Summit London, UK

Oct Chicago COO Summit Chicago, US

Oct US Hedge Fund Performance Awards New York,US

Oct US Hedge Fund Services Awards New York, US

Nov US Hedge Fund Technology Leaders Summit US

Nov US Fund of Hedge Funds Leaders Summit US

Nov US Allocator Intelligence Summit US

Nov European Hedge Fund Technology Awards London, UK

Nov European Alternative Credit Service Provider Awards London, UK

Nov European Alternative Credit Performance Awards London, UK

Nov European CTA Service Provider Awards London, UK

Nov European CTA Performance Awards London, UK

Nov San Francisco Hedge Fund Operational Leaders Summit San Francisco, US

Dec West Coast Liquid Alternatives Summit San Francisco, US

Regular eventsFRENQUENCY EVENT LOCATION

Monthly COO/CFO/CTO dinners US

Monthly COO/CFO/CTO dinners UK

Monthly Members Breakfast UK

Monthly Members Breakfast US

Monthly Investor Breakfast London

Monthly Investor Breakfast NY

Monthly Investor Dinner/RT Europe