Global Prime Partners, the global prime brokerage boutique which specializes in supporting emerging managers, has expanded its service capabilities into the Asian markets region with the recent hire of ex-hedge fund and family office manager Rupert Street. In an interview with Opalesque, Street explained that he had used GPP's services in the past and so had seen the advantages of a specialist mini prime broker from the outside.
While based in Hong Kong, Street has been travelling extensively through Asia researching the hedge fund industry and in particular emerging managers in the region. "Sub-$150m there is no prime brokerage service" Street says, observing that many of the tier one prime brokers are actually looking to cull smaller and less profitable funds.
In his research process, Street has found the Asian hedge fund industry somewhat depressed and cautious. "Asia seems to have a massive divide between really good performers and big funds with decent assets under management who are able to dominate the sector but I notice that in the smaller sector thereseems to be little support for emerging managers or funds that are starting up."
The regulatory requirements of even registering a fund in Hong Kong dictate that a new manager has to have at least $1m to start with. "When you are leaving a bank or your old fund group, you need a leg up" Street says.
"My first activity is to find potential hedge fund managers who are either established or about to be let go from prime brokers, prop traders who are being culled out of banks and private wealth managers and family offices who want to stay away from the private banking route because it is expensive" he says. "We offer an affordable solution by offering prime brokers services to help funds looking to launch and build a track record in the sub-$50m 'space'."
One of the unexpected outcomes of the latest regulations in Europe is that money is flowing into Asia", Street says. "I want to set up shop and say you can do business sub-$50m or even sub-$5m and we need to develop an entrepreneurial spirit. Baby hedge funds grow up to become big ones and in Asia there is a lot of opportunity to build that connection."
This piece first appeared in Opalesque on 25th July.
This article was published in Opalesque's Asia Pacific Intelligence our monthly research update on alternative investments in the Asia-Pacific region.