New Managers November 2012

Seeders' Corner - There is more to seeding than just a ticket size + Seeders' Corner news review

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Opalesque New York Roundtable

Quite a lot was said during the recent Opalesque New York Roundtable about emerging fund managers and the business of seeding; which is why I am including an outline of this particular conversation here.

Matthew Denning said there are still some investors out there who are willing to take some illiquidity risk at the moment, especially the type of illiquid terms that his seeding venture is currently offering (which requires investors to commit their capital for several years). Denning is Senior Research Analyst at PineBridge Investments, a $68bn asset manager.

Matthew Denning

"So, if you are looking at a 7-8% return profile from a traditional diversified hedge fund investment," he explained, "we think we can get an additional 3-5% from this revenue pot via the seeding arrangements. This will be a perpetual revenue stream, even after you have redeemed the seed capital."

Amanda Haynes-Dale, Managing Director of Pan Reliance Capital Advisors, a boutique fund of hedge funds group, reminisced about emerging managers 20 years ago who could be a couple of guys and a phone, and commented and how that has changed as new businesses must raise $50m to $100m and face increasing demands from regulations and consultants.

"Unfortunately, a lot of the entrepreneurial spirit that emerging managers had 20 years ago has been stymied due to increased regulations and expenses for st......................

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This article was published in Opalesque's New Managers a top-down monthly analysis, news and research publication on the global emerging manager space.