US banks hope to build by strengthening capital introduction teams Investment banks looking to capitalize on the wealth of the trillion-dollar hedge fund industry are plowing more resources into helping hedge fund managers raise money. By strengthening their capital introduction teams â once seen as a glorified dating service â prime brokers hope to secure potentially lucrative start-up funds as clients. In a survey by financial research company Greenwich Associates, hedge funds with $1bn (â¬684,000) or more in investments ranked capital introduction 10th in a list of priorities. It took a back seat to issues such as competitiveness of financing rates, the reputation of the prime broker, reporting and client services capabilities. But for hedge funds managing assets of $100m or less, capital introduction was a number one concern. Capital introduction teams emerged in the 1990s when they were seen largely as a tool to attract and retain hedge fund clients by providing opportunities for managers to meet potential investors for their various funds. But it is only in the past couple of years, as the number and size of hedge funds has increased, that the ability to find fresh sources of capital investment has been viewed as business critical by prime brokers. A source at a prime broker in the US said: âThe job has changed enormously. This used to be an event-organizing job. Now, two thirds of what capital introductions do is not event-driven.â Although Morgan Stanley, Goldman Sachs and Bear Stearns are the three largest prime brokers â between them dominating 58% of the hedge fund market, according to last yearâs Lipper Hedge World survey â banks with younger capital introduction divisions such as Credit Suisse, Lehman Brothers, UBS, and Merrill Lynch are racing to increase staff numbers and services to unseat their rivals on a global scale. http://www.financialnews-us.com/?page=ushome&contentid=2349214053
GAIMInvest 2007 conference, 4th - 6th December, Geneve. 100+ speakers including Peter Clarke, CEO, MAN Group plc Kent Clark, CIO, Goldman Sachs Hedge Fund Strategies Reza Vehabzadeh, JP Morgan Alternative Asset Management Charles Simeon, Deutsche Asset Management Switzerland I think a lot of coffee to be served.... www.icbi-gaiminvest.com
Careful. Prime brokers (PB's) were recently in the news for wanting to sell the strategies of their clients' hedge funds. Reveal your edge to the NY prime brokers and it may take them all of 3 months to trade the strategy for themselves or sell it, and leave you on the street wondering what happened. This scenario is perfectly in line with the past behavior of PB's. PB's knew of hedge funds that were frauds (Manhattan, Cambridge Partners, etc.) and they continued to accept money into the funds, and never raised a red flag of any kind. That being said, I've wondered why some entity hasn't gone out and actively sought hidden talent, shining lights in dark corners for people who know how to make money but could benefit from an infusion of capital. Why do they wait for someone to hunt them down and knock on their door? Someone will figure this out soon. A friend of mine who made a proposal to the DELL office in NY portrays them as this kind of entity which has a gate around it - which is exactly backwards.