EUROPE - Investment bank Bear Stearns is backing a new hedge fund seeding vehicle unveiled by Liberty Ermitage.
The Dublin-domiciled Strategic Partners Fund will seed and cultivate start-up and emerging hedge funds, mainly within the European market.
The fund will start trading with around US$110m commitments from institutional investors for its July opening, with a target of about US$200m. The fund will have three further quarterly opening periods and Liberty Ermitage anticipates closing the fund with US$500m under management.
Commenting on the investment, Richard Lindsey, president of Bear Stearns Securities, said: “[This partnership] enables us to form relationships with early stage hedge fund managers in the rapidly growing European hedge fund marketplace and it further solidifies our position as one of the leading prime brokers globally.
“This investment demonstrates our continued commitment to the European hedge fund industry and our desire to continue to grow our global prime brokerage franchise.”
Liberty, which has been managing hedge funds since 1984, has committed US$50m to the fund, with interest coming from US pension funds and foundations and US and European investment banks.
The firm argues that now is a good time to step up investments into early stage managers, as the current environment has created a whole range of attractive seeding propositions.
Ian Cadby, group executive director - strategic investments and the portfolio manager, said: “The fund will invest in hedge funds across a range of both directional and spread based strategies and involves more than just seeding.”
Cadby added: “It is typical for fund of funds to insist on transparency at hedge fund level, but how many offer transparency at the business level?”
Liberty will charge a 1.5% annual management fee and an incentive fee based on 25% of the economic participation in the underlying hedge fund businesses. Minimum subscription has been set at US$20m.
Liberty Ermitage Group has over US$2.4bn under management with US$700m in money funds, US$700m in equity and bond funds and US$1bn in hedge funds.
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