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Alternative Market Briefing

Other Voices: The evolution of hedge fund capital introduction events

Wednesday, April 14, 2021

By: Don Steinbrugge, Agecroft Partners

Hedge fund capital introduction events, in which investors and fund managers meet in a speed-dating environment, have increased in popularity within the past decade.

These events allow participating allocators to review the details of a large number of fund managers, and select a subset of those they would like to meet in a brief one-on-one meeting or group roundtable setting. These can be either intro or update meetings. These capital introduction events are an efficient way for investors to quickly complete initial due diligence on a large scale. They also allow managers to gauge investor interest in their strategy from a diverse group of allocators.

Capital introduction conferences and teams were originated by prominent investment banks in the late-90's as a way of differentiating their firm from competitors in order to attract new hedge fund clients. Many of the services rendered by these banks' prime brokerage units are fairly commoditized. The quality of a prime broker's capital introduction team's services and conferences became a primary factor for hedge funds in selecting a prime broker.

Hedge funds are highly profitable businesses for investment banks through securities lending and trading, along with other services. The securities lending industry continues to be inefficiently priced, allowing for high profit margins, mainly due to the lack of a centralized marketplace that would enhance competitive pricing......................

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