Singapore Hedge Fund

Alternative asset management in Singapore

Recruitment starting again for hedge funds based in Singapore and Hong Kong.

From efinancialcareers.sg, some good news on Asian Hedge Funds with new activity noted in Singapore and Hong Kong. The dark days may at last be over for Asia’s hedge fund sector, but recruitment is still selective, senior and sales-focused, with a real recovery not expected until next year.

Hedge funds are making a minor comeback after suffering their worst year on record in 2008, outperforming global benchmarks and experiencing an inflow of new assets, according to data provider Eurekahedge.

Asia has experienced a lot of the recent action. Winton Capital Management, for example, is starting a new fund in Japan and hiring staff in Hong Kong – its expansion coming just months after rivals like GSO Capital Partners, HBK and Ramius retreated from the region.

And ex-bankers are seizing the opportunity to start up their own firms in Asia. The list of budding fund managers includes: Nick Taylor, ex-head of Citadel Investment’s principal investments business in Asia and Europe; Shafiq Karmali, a former Goldman Sachs trader; and Edwin Wong, previously a Lehman Brothers MD.

Hedge fund recruitment is for now small-scale and focused on the front office. Jared Ng, regional consulting director, PeopleSearch explains: “Because short-term revenue is essential for the survival of companies to meet their short-term liability, revenue-generating jobs are more in demand. As a result, there have been more openings for sales positions.”

Peter Douglas, Asia Pacific council member for the Alternative Investment Management Association, says funds want experienced professionals who can hit the ground running. “In Singapore, Artradis, for example, has been taking on some senior people, basically taking advantage of a cyclical opportunity to add talent that’s now available,” he adds.

Funds that have not been so badly affected by the financial crisis are starting to recruit again after lying low for the past nine months, says Angela Kuek, manager, banking and financial services at Hudson in Singapore.

Douglas thinks the current fund inflows in Asia are coming mainly from specialist investors. The “real volume” is likely to return next year when more capital enters the market. “Asset size directly drives revenues and therefore the capacity and inclination to hire,” he adds.

efinancialcareers.sg

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AIMA Singapore: Draft European Directive on Alternative Investment Fund Managers could significantly impact Singapore’s hedge funds

From Opalesque, some potentially bad news for hedge funds in Singapore.   The Singapore Branch of the Alternative Investment Management Association (“AIMA”), the industry trade association for hedge funds, warns that the European Commission’s draft directive on Alternative Investment Fund Managers will make it unduly difficult for Singapore based alternative investment managers to access the European market. The directive will also complicate the allocation of a global portfolio’s fund management, making the delegation from Europe to Asia near impossible.

Under the directive, managers based outside of Europe will need to obtain a special marketing passport before being granted access to the European market. However, the passport will not be available for three years after the introduction of the directive. Significant obstacles to acquiring the passport will also be imposed; regulatory equivalence between Europe and the applicant’s home jurisdiction will need to be established, key criteria include comparable prudential legislation, equal access to markets, and a tax information-sharing agreement. Capital requirements and leverage restrictions will also need to be implemented. Local regulations will need to be effectively adjusted in manners outside current discussion in international regulatory forums.

The proposed directive will apply to all types of “non-UCITS funds”, including private equity, real estate, infrastructure, and hedge funds.

Michael Coleman, the Chairman of the Singapore branch of AIMA, commented: “The effect, if not the intent, of this directive is highly protectionist. If it is left unchanged it will have a major negative impact on the hedge fund industry in Singapore, which has a large European component to its investor base. Also, it will have negative consequences for European investors who will find their choice of investment opportunities severely restricted. ”

This will have an adverse impact on Singaporean investors with European funds or managers. Due to the restrictions imposed, compliance costs will increase and returns will lessen. European investors will also suffer from the higher costs passed on to them and face a diminished investment universe.

Opalesque

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Penjing Asset Management Ltd, Hong Kong to Expand Seeding of New Hedge Funds

Ronnie Wu, chief investment officer of the $400 million hedge fund of funds house Penjing Asset Management Ltd., will start a pool of money dedicated to providing early investments to new hedge funds next month.

It aims to make five to six investments with the flagship Penjing Asia Fund by year-end, he said in an interview yesterday. The new pool will begin with about $25 million from Wu’s family and friends and then raise capital from investors after the initial money has been deployed.

Wu is seeking to profit from the spurt of start-ups emerging from a financial crisis that’s caused $1.5 trillion in losses and writedowns at financial firms globally and seen more than 300,000 jobs lost, according to data compiled by Bloomberg.

“When I first managed Asian funds of funds back in 2002, we saw a lot of talent but very little capital after the 2000 technology bubble,” said Wu. “The current environment is worse than 2002. You have a lot of experienced talent whose alternative to starting on their own is to sit at home.”

About 150 new funds were set up globally in the first quarter, the highest since the second quarter of 2008, according to Chicago-based Hedge Fund Research Inc. Managers are finding it harder to raise money as investors pulled more than $103 billion from the global industry in the three months to March, reducing total assets managed to $1.33 trillion.

Some managers have left investment banks cutting down on proprietary trading, while others are striking out on their own after the worst hedge fund industry performance on record made some firms unable to charge performance fees, prompting job cuts.

Start-ups

Nick Taylor, ex-head of Citadel Investment Group LLC’s principal investments business in Asia and Europe, Shafiq Karmali, a former Goldman Sachs Group Inc. trader, and Edwin Wong, previously a Lehman Brothers Holdings Inc. managing director, are among those starting new hedge funds in Asia.

“This is turning out to be the year of start-ups as we see an increasing supply of successful and quality managers who are leaving the prop desks of big banks and global hedge funds to start their own shop,” said Christophe Lee, chairman of the Hong Kong and China national group of London-based Alternative Investment Management Association.

Penjing most recently seeded a fund three months ago and will invest in another next month, he added.

The new pool will have fewer seeding restrictions than Penjing’s existing funds of funds, which cap any single holdings at 5 percent of their investments to diversify risks.

“If we like a certain manager and think we can benefit from their growth by seeding them, the flagship fund is not an ideal vehicle because of its diversified nature and stringent liquidity requirements,” said Wu. “If we create a dedicated seeding vehicle, then the participation is much higher, together with a high risk profile.”

Wu is looking for candidates that meet at least one of the following criteria: strong performance, unique investment strategy, or the potential to rapidly expand assets, he said.

While his seeding activity will focus on startups, it may also include new offerings from managers that have been in operation for a while.

Penjing’s seeding investments so far range from $5 million to $15 million each. Future investments could amount to as much as $25 million after the new pool is set up, Wu said.

Capital Inflows

The company has attracted new capital from investors since May, Wu said. The inflows, the first Penjing has seen since Lehman’s collapse in September, came mostly from private banks representing wealthy individuals, he added.

Yet Penjing is still experiencing some investor withdrawals, leaving its assets under management largely flat, said Wu.

Penjing Asia Fund, set up in April 2005, returned 9.8 percent this year through May, according to a newsletter to investors. The Eurekahedge Asia-Pacific Multistrategy Fund of Funds Index, tracking 54 members, gained 3.8 percent in the same period.

Patrick Kemmis
Senior Partner
VBK Partners LLP

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