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Alternative Market Briefing

Infovest21: Many family offices and small funds of funds are seeding hedge funds under the radar

Friday, May 10, 2013

Benedicte Gravrand, Opalesque Geneva: - In a special research report called "Start-Ups, Seeders and Strategic Stakes" (April 2013), Infovest21 analyses the trends and outlook within the hedge fund seeding community. Infovest21, an information services company for the hedge fund industry, notes that the term "seeding" should be interchangeable with "acceleration capital." (see article on 2012 report here).

According to report, the seeders’ size and background affect their level of activity. The largest seeders, a handful of them such as Blackstone, Reservoir, Grosvenor, Brummer, do large deals ($100mn+ for 20% revenue share) and look for high pedigree managers. But a majority of their capital, maybe as much as two third of it, has not yet been deployed. The report cites Reservoir as an example, which raised more than $1bn but has done few deals so far, and Mariner which "is doing a large seed deal from Alaska Permanent Fund" but has only seeded a couple of managers so far.

Lois Peltz, president of Infovest21 and author of the report, says that much of the seeding is done under the radar screen by family offices that are looking for liquid and uncorrelated strategies and often do one-off, small sized dea......................

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