Hedge Fund Backers | A List of Capital Sources for Hedge Funds

Submitted By Richard Wilson

Hedge Fund Backers

Hedge Fund Backers | Capital Raising

Affiliated Managers Group
Boston
Brett Perryman
Public company has taken equity stakes in four hedge fund shops: AQR Capital,
Blue Mountain, First Quadrant and Value Act.

Asset Alliance
New York
Bruce Lipnick
Twice has backed off plans to sell stock to the public, most recently in August and
in 1998. Offers operational and marketing support in exchange for 50% ownership
of management companies.

BRI Partners
Chicago
Adam Brass
Provides investment capital in exchange for marketing and operational support.

Boxtree Capital Rumson
N.J.
Robert Picard
732-939-9000
Founded earlier this year by former Optima Fund Management chief investment
officer Robert Picard, the firm has not yet made any acquisitions. Hopes to buy
minority interests in funds of funds and hedge funds.

Capital Z Asset Management
New York
Jim Marrone
212-965-0800
Has backed 17 hedge funds, including John Burbank’s Passport Management.
Takes meaningful minority stakes as an anchor investor in startups. In January,
announced management buyout of hedge fund-sponsorship business from parent
Capital Z, in partnership with private equity shop Paine & Partners.

Citadel Investment
Chicago
Bryan Locke
Has seeded three funds via its Citadel Discovery vehicle, which is run within its
Citadel Alternative Asset Management unit. The vehicle invests only its parent’s
capital.

Financial Risk Management
London
Patric de Gentile-Williams
Big fund-of-funds operation run by Blaine Tomlinson launched a hedge-fundbacking
vehicle in January via a new unit, FRM Capital Advisors. Focuses on earlystage
and startup managers. Offers operational and infrastructure support,
including risk-management, compliance and technology services. In exchange, it
shares in management and performance fee revenues.

Focus Investment
New York
Andrew Godfrey
Provides seed capital to startups and is a strategic investor in more-established
managers. In exchange, it usually shares revenues.

Fortune Group
London
Simon Hopkins
Has seeded more than 20 firms over the past decade. Terms vary, but standard
model includes share of revenue in exchange for $25 million to $50 million
investment.

Goldman Sachs
New York
Jonathan Sorrell
In the fall of 2007, word got out that Goldman had set up a private equity fund to
take stakes in hedge fund managers. At that time, it purchased 10% of Londonbased
commodities manager Winton Capital.

Hardt Group
New York
Jeff Landle
Backs more than two dozen operations, usually sharing revenues, but also taking
equity stakes in some cases. Since 2004, has invested north of $200 million in
seed-capital arrangements.

Investcorp
Bahrain
Hank Murphy
Has financed eight hedge fund companies, including two deals slated to be
announced in the next month or two. New York unit typically provides $75 million
of seed capital, as well as operational and marketing support. In exchange, it
shares revenues. Its affiliate managers, including Minneapolis-based Interlaken,
have $2 billion of seed and client capital.

J.P. Morgan Incubator Strategies
New York
Simon Lack
212-648-2593
Expects to do a couple of deals per year, but no more than that because the
treacherous market makes it too difficult to evaluate hedge funds.

Jefferies Group
New York
Tom Witz
Still wants to seed hedge funds and offer operational support despite cutbacks in
the amount of capital parent is willing to provide.

Larch Lane Advisors
Purchase, N.Y.
Marc Jurish
Established in 1993 by Marc Jurish and became an affiliate of Old Mutual Asset
Management in 2005. In June, entered into a joint venture with the now-embattled
AIG Investments to provide seed capital between $50 million to $200 million per
deal.

Liberty Ermitage
London
Jonathan Wauton
Still amenable to seeding deals, but it’s temporarily out of the game until it raises
capital for a new vehicle. The life of an earlier vehicle recently ran its course.

Man Group (RMF):
Hedge Fund Ventures
London
Hans Hurschler
Has backed 32 operations over the years in exchange for revenue or equity stakes.
Terms have changed, however, with the November launch of its RMF Global
Emerging Managers fund, which has backed eight management companies this
year. Fund enters only revenue-sharing arrangements. One fund it has seeded is
Bill Seibold’s Noroton Capital.
Man Group:
Man Global Strategies
London
Alex Lowe
The Man unit uses parent’s proprietary capital to invest in early-stage managers.

MD Sass-Macquarie Financial Strategies
New York
Steve Shenfeld
Has backed nine companies and expects to add a couple more to its roster by
yearend. Set up as private equity vehicle, investor money is locked up until 2014,
with the possibility of extending to 2017.

Millennium Management
New York
Adin Kahn
Allocates capital in a flexible manner to satisfy unique business and investment
relationships.

Ospraie Wingspan
New York
Eric Vincent
Since its start in 2005, has allocated capital to eight independent managers of
commodities funds. Ospraie also offers marketing and operational support.
Wingspan is a unit of Lehman-backed Ospraie Management, which is liquidating
its flagship commodities vehicle due to losses.

Reservoir Capital
New York
Dana Craver
Has ownership stakes in 10 managers. Founded by Dan Stern and Craig Huff,
former partners at Ziff Brothers Investment. Reservoir was an early backer of such
big names as HBK Investments, Och-Ziff and Ellington Management.

Skybridge Capital
New York
Anthony Scaramucci
Has seeded nine hedge funds. Skybridge formed a joint venture with Challenger
Financial of Australia to mine for talented fund mangers down under, as well as to
market current funds to investors. Computer tycoon Michael Dell is a big investor
in one of its funds.

Triple A Partners
Santa Monica, Calif.
Hans Tideman
Has so far seeded three Asia funds, its specialty. Provides working and seed
capital along with operational and marketing support.

Weston Capital Management
Westport, Conn.
Chris Kelley
Shares revenues with nine managers in exchange for a combined $1.5 billion of
trading capital. Doesn’t supply working capital and doesn’t take equity stakes.
Affiliated funds include White Oak, Agamas Capital and Frontfour.

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