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Three firms form joint venture to seed emerging managers

Friday, August 13, 2010
Opalesque Industry Update - Three asset management firms have formed a strategic joint venture to launch a hedge fund seeding business. Atlantic Asset Management, Montage Asset Management, and Palmer Square Capital Management have announced the creation of the Seed Fund to provide capital to emerging hedge funds.

In a joint statement, the trio said the fund would primarily target talented emerging hedge fund managers with existing track records or experienced investment professionals spinning out of investment banks and established hedge funds to launch new funds. The Seed Fund held its first close last month as large institutional funds and ultra high net worth family backed the new investment vehicle.

In an interview with PIonline, Palmer Square Managing Director Chris Long declined to specify the amount of money raised by the fund so far. But he said they are looking to invest between $25m and $50m per diversified portfolio of emerging hedge fund managers. These includes funds focused on long-short, credit and global strategies.

Long said in a statement: “We are delighted to form this joint venture with Atlantic and Montage. Due to the dislocation that occurred in 2008 and the increased regulation on Wall Street, we continue to see many talented investment managers that have departed investment banks and hedge funds trying to attract their initial large investor,” adding“This is a great opportunity for us to not only apply our fund of fund management and risk control oversight capabilities, but also leverage our network and expertise in evaluating and investing in hedge funds.”

For his part, Atlantic Asset Management’s Managing Director, Don Trotter, described the partnership as an extension of the seeding and investment management development business that Atlantic began in 1992.

“Since then, within Atlantic and with affiliates, we have been instrumental in the successful seeding, asset growth and development of many investment management strategies, investment management firms, and hedge funds. We have achieved success by partnering with top managers and providing the necessary services and access to institutional markets to help them achieve the critical mass necessary to prosper,” Trotter commented.

While Gary Hanson, President and CIO of Montage Asset Management sees the partnership with Palmer Square and Atlantic as an opportunity to benefit from current supply and demand imbalance for emerging hedge fund capital.

He said: “With this partnership, we are able to take advantage of this unique opportunity by not only providing the large block of investment capital, but also helping these talented managers achieve their capital raising targets through a concerted marketing effort to both the institutional and high net worth distribution channels.”

Palmer Square is a provider of advisory services, proprietary funds, and customized allocations focused specifically on alternative investments such as hedge funds and private equity funds. Asset manager Mariner Holdings LLC bought a controlling interest in Palmer Square in Dec-2009.

Atlantic currently manages over $6bn in AuM in a variety of fixed income, asset allocation and specialized investment strategies for institutional investors and high net worth individuals. Montage is an SEC-registered investment advisor focused solely on asset management, which manages approximately $7bn in assets.
-Komfie Manalo

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