BOSTON (Reuters) – Wealthy investors are showing a vigorous appetite these days for newly minted encumber fund managers, judging by the smartness in one Blackstone Group managed portfolio.
In almost four months, hundreds of individual investors sank some 5 million into a so-called fence fund seeder set up by the New York-based investment firm, a recent regulatory filing shows.
While the greatness of money raised by Blackstone in opposition to its Strategic Alliance Fund II comes from pension funds, central banks and other institutional investors, renewed demand from the ultra-rich investors provides fresh evidence of how the .9 trillion fortify fund industry is roaring back to life following the financial crisis.
The red-glowing interest in the Blackstone fund furthermore shows how a firm best known conducive to making private equity transactions is jolt up the hedge fund world.
Overall, Blackstone’s Strategic Alliance money has raised .4 billion, say population familiar with the fund. The reinvigorated fund, which already has “seeded” two newcomers and is in advanced discussions to semen another two, is Blackstone’s take part with foray into the hedge fund incubating occupation. An earlier seeder fund raised .1 billion and invested that circulating medium with eight young funds including Richard McGuire’s Marcato Capital, Eric Bannasch’s Cadian Capital Management, Nick Taylor’s Senrigan Capital and Michael Hodge’s Hilliard Street.
The two seeder funds plus some billion that the established has in its hedge funds profession have turned Blackstone into one of the ~ numerous prominent and powerful investors in the take refuge in a hiding-place fund industry. Some of the well-established portfolios that Blackstone’s fund of funds group has long invested with include mega-stars like Steven Cohen’s SAC Capital Advisors and William Ackman’s Pershing Square Capital Management.
With its seeders, Blackstone is hoping to influence in on the ground floor through promising new managers and profit down the road if these newcomers effect it big. Blackstone’s seeders take anywhere from a 15 percent to 25 percent cut of the business, people familiar through the terms said.
Competition for Blackstone’s sperm money is fierce.
For its earliest fund, Blackstone reviewed applications from from one place to another 250 prospective managers before picking deserved eight to write checks to. People familiar with Blackstone said new managers gain initial commitments of between 0 a thousand thousand and 0 million. The underlying managers in that earliest fund now control about .5 billion in property , showing that other investors were hasty to follow with fresh funds put ~ top of the .1 billion that Blackstone committed.
A Blackstone spokeswoman declined to comment.
The selection process has been similarly prompted by emulation for the second seeding fund. So well-nigh, only two people have been awarded circulating medium.
The two men seeded so well-nigh are former Kingdon Capital manager John Wu and former Credit Suisse goods trader George Taylor. The firm is cease to inking a deal with a strange fund managed by Michael Pearl, each alumnus of Stanley Druckenmiller’s Duquesne Capital, and Howard Shainker, who beforehand worked for Dan Loeb’s Third Point Capital, populate familiar with the selection process said.
Blackstone, of course, is not alone in the seeding vocation. Rivals like Skybridge Capital, Tiger Management, and Capital Z Asset Management and others furthermore promise to find a new procreation of talent, providing would-be investors through a wide selection of portfolios and newcomers to stake on.
But not all investors are wowed by the seeding business.
Critics note that seeder funds can have uneven records with some inevitable problems no matter how thorough the what is ~ diligence. Indeed Kishore Moorjani, one of the eight managers on tap in Blackstone’s first seeder store, has closed down and returned wealth to investors, people familiar with the difficulty said.
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