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New Managers May 2013

Seeders' Corner - Hermes BPK and Northern Lights' Accelerator Fund focuses on mitigating operational and business risk

 

Mark Baker

In September 2011, Northern Lights Capital Group, LLC, an $11bn private equity firm based in Seattle, and Hermes BPK Partners LLP, a $1.6bn fund of hedge funds based in the UK, partnered to launch a new investing platform that would provide access to early stage hedge fund managers for institutional investors. The Accelerator Fund was started in March this year, just as it was making its first investment in an emerging manager called Taurasi Capital Management, a new fundamental long/short credit hedge fund based in New York.

Hermes BPK, which was started in 2008, is the hedge fund division of Hermes Fund Managers, a Γƒβ€šΓ‚£30bn (US$45bn) asset manager which itself is owned by BT Pension Scheme, the largest pension fund in the UK.

"Hermes and BT are the founding fathers of the corporate governance movement," Mark Barker, Hermes BPK's founding partner and co-CIO told Opalesque. "There was a call coming from our anchor investor saying Γƒ’Γ’β€š¬Γ‹Ε“the hedge fund industry is broken, be a part of fixing it.' This was really to address the governance and operational issues that had become glaringly apparent during the crisis. When we started putting money to work, we focused on improving their governance structures, their operational structures, their transparency and their general investor alignment."

Hermes likes to invest in smaller managers, but as many of them had questionable operational and governance standards, the fund of funds worked with them to improve those standards. But then the managers' assets invariably increased substantially as they became attractive to institutions. So they did not stay small, and this was a......................

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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.
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