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With an influx of next-generation seeders and high-quality managers, 2015 promises to be a fertile period for seeding activity in Asian hedge funds
Top from clockwise: Myo Schollum, Chuak Chan and Michael Garrow
Asia has historically been marked with a hedge fund seeding activity that could be best described as anemic and insignificant, and often, almost non-existent. The scenario, however, has changed considerably with a significant number of high profile seeding deals visible in the market, bringing with them high-quality managers with sizeable amounts of start-up capital.
Myo Schollum, who heads Asia Prime Services coverage at Credit Suisse, says that a considerable amount of seed capital has been deployed to new managers in the region not only by traditional seeders, but also by large-sized hedge fund platforms and family offices in Asia. The activity accelerated in the latter part of last year, and there are no signs of a let-up in momentum for 2015.
"Unlike in previous years when most start-up managers were starved of capital as seeders were not focused in Asia, a significant amount of capital has been deployed to a number of Asian managers," he says.
Notable examples of seeding last year were Hong Kong-based Kontiki, which was seeded by the New York-based Ziff brothers' family office, and that of Pleiad Advisors, an ex-Soros team seeded by Hong Kong-based strategic investor, HS Capital.
Pleiad, through its partnership with HS Group, is understood to have attracted significant interest from institutional investors in the US and Europe. TPG Holdings, a global private investment firm with over $66 billion in capital, owns a stake in Hong Kong-based HS Group. A pan-Asia fund focused long/short fund, Pleiad was established by a team of former China and Japan specialists from Soros Fund Management in Hong Kong.
Seeding frenzy
Industry managers attribute the strong flow of seed capital to the abundance of high calibre talent in the region that have launched or are preparing to launch their new strategies and offerings. "The strong calibre and pedigree of these managers have whetted the appetite of big players, including large hedge fund platforms and family offices, to provide launch capital," explains Schollum.
The buoyant seeding mood was also given a lift by the strong performance last year of several...