By Laurence Fletcher
LONDON--Several big name traders are launching hedge funds in
the U.K.'s capital as a surge in new startups gathers momentum.
Chris Rokos, formerly of Brevan Howard LLP; David Fear, who
previously ran a fund for the Ziff Brothers; and Christopher Dale,
who ran a hedge fund at Millennium Management LLC, are among a crop
of high-profile figures debuting new funds.
In general, new hedge fund launches have struggled in Europe
recently against a backdrop of high operating costs and a tough
trading and economic environment. While conditions remain harsh for
lesser known names, proven managers starting new ventures are
catching the eye of investors.
"The environment [in Europe] is great at the moment," said one
London-based prime broker at a major bank. "It's more constructive
and fertile than it has been at any time since [the collapse of]
Lehman.
"Because of the improvement in the macro economy, people are
willing to take career risk, plus the capital raising environment
is better."
According to data group Hedge Fund Research, fund launches in
Europe have risen from 311 in 2008 to 576 last year. In contrast,
the number of launches in the Americas has been decreasing since
2011.
The most high-profile launch this year looks to be from Mr.
Rokos, a co-founder of Brevan Howard Asset Management LLP, one of
Europe's most powerful hedge fund firms. A high-profile legal
dispute over a noncompete agreement with Alan Howard, who heads
Brevan, was resolved earlier this year, paving the way for the
launch.
Industry insiders expect Rokos Capital Management LLP to launch
in the autumn and to raise several billion dollars. Mr. Rokos, who
made billions in trading profits for Brevan, is applying for
regulatory approval for his firm and has been meeting with prime
brokers.
In addition to an expected investment from Mr. Rokos himself,
the new fund already has the backing of Mr. Howard, who has a
fortune of GBP1.6 billion ($2.38 billion) according to the Sunday
Times Rich List.
Alan Kilkenny, a spokesman for Mr. Rokos, said: "Preparations
are going well. The FCA application for authorization has been
submitted but, as this is the beginning of the registration
process, Chris and the team are making no presumptions. All that is
possible to say is that the team are very busy with the
launch."
Meanwhile, David Fear, a Canadian who previously ran a hedge
fund in London for the billionaire Ziff brothers, has launched
Thunderbird Partners with $1.5 billion in assets under management,
making it one of this year's biggest launches.
"People are starving," said Nicolas Rousselet, head of hedge
funds at Switzerland-based investment firm Unigestion, talking
about investor hunger for top managers. "There's a huge amount of
money looking to invest in established managers, and big managers
are closed. If it's well presented it will raise a lot of
money."
The new wave is being driven by star traders quitting existing
hedge fund firms and branching out on their own. That is happening
at the same time as a wave of proprietary trading desks spinning
out of banks to become stand-alone hedge funds--a process driven by
regulatory pressures on bank trading activities--is coming to an
end.
"A few years back you were competing with the top prop trading
guys. That held a lot of people back [from launching]. Now the
sense is, 'OK, the coast is clearer'," said Lars Kroijer, founder
of hedge fund firm Holte Capital and now an author and board member
of several hedge funds.
Among the crop of managers launching in London is Christopher
Dale, who previously worked at Millennium Capital Partners and who
is launching Kintbury Capital LLP. This month the firm hired Nick
Xanders, who was also previously a fund manager at Millennium.
Mr. Dale and Mr. Xanders didn't respond to a request for
comment.
Bruce Emery, a former portfolio manager at Citadel Investment
Group, is launching Greenvale Capital LLP in London in the second
half of this year and recently hired Christopher Dennis from
Deutsche Bank AG to head fundraising. The market neutral equity
fund will invest globally, with a focus on the U.S. and Europe,
said a person familiar with the matter.
Fredrik Juntti, who previously worked at Citadel and Montrica
Investment Management, has set up Abberton Capital LLP, which has
raised $200 million in seed capital, according to one hedge-fund
investor.
Also expected to gather assets is Michael Sidhom, who previously
ran a long-short equity fund at Ziff Brothers Investments in London
and who is launching Immersion Capital which launched with GBP600m,
having hit its target and turned away potential investors,
according to a person familiar with the matter.
However, industry insiders say that raising $1 billion by the
time a fund launches is still out of reach to all but a select
few.
"To get to $1 billion you need a large amount of personal wealth
or investors who know you very well. $1 billion funds are the
exception, not the rule," said Sam Diedrich, who manages about $1.1
billion at Pacific Alternative Asset Management Co. LLC.
Nevertheless, investors point to managers with good reputations
who can quickly garner assets once a fund is up and running.
East Lodge Capital Partners LLP, for instance, a structured
credit and direct lending fund that launched in London last April,
has grown rapidly in size. The fund is now running more than $600
million in assets, said a person familiar with the matter.
Write to Laurence Fletcher at laurence.fletcher@wsj.com
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