Trivest Advisors Ltd., led by former State Street Global Advisors Inc. fund manager Wu Huimin, raised $93 million for its first hedge fund, said three people with knowledge of the matter.
The equity long-short fund, run by Wu and Xue Lan, former Citigroup Inc. head of China research, started trading on July 1 and will invest in Chinese stocks, said the people who declined to be identified because the information is private.
Investors are seeking fund managers with experience in China, who have worked for international firms and who can articulate their strategies in English, one of the people said. Funds that can control risks are in demand, another added.
“Trivest’s team brings direct Asian hedge-fund experience, which may have provided an additional degree of comfort to investors during the fundraising,” said Charles Stucke, a managing director at Chicago- and New York-based Guggenheim Partners LLC, whose advisory businesses supervise more than $50 billion in client assets.
Many investors have taken a wait-and-see approach toward China-based managers, due to the emerging nature of the market and lack of previous hedge-fund experience, he said. Most new hedge-fund managers’ experience is confined to managing long- only funds or research in the region, Stucke added.
Wu, Trivest’s chief investment officer, oversaw the Dragon Billion Greater China Fund at Hong Kong’s Prime Capital Management Co. Previously he was a Hong Kong-based fund manager at State Street. He declined to comment.
The Dragon Billion hedge fund, whose assets peaked at $831 million in October 2007, returned 74 percent in 2006 and 41 percent in 2007 under his leadership, according to data compiled by Bloomberg. That compared with gains of 59 percent in 2006 and 56 percent in 2007 for the Eurekahedge Greater China Hedge Fund Index.
Xue resigned in April from Citigroup after seven years, an unidentified spokeswoman for the U.S. bank said then. She was head of Hong Kong and China research at Merrill Lynch & Co. previously.
A third Trivest partner, Sun Lu, was previously a China analyst for Indus Capital Global Advisors, the people said. Sun was a telecommunications analyst with Lehman Brothers Holdings Inc. before joining Indus.
Startups are facing increasing competition for capital after investors pulled $285.6 billion out of the industry in 2008 and 2009, cutting hedge fund assets globally to $1.6 trillion at the end of last year, according to Chicago-based Hedge Fund Research Inc. Many established managers reopened their funds to new investors after investment losses and redemptions.
Seventy-five new Asian hedge fund startups raised an average of $16.9 million at inception since 2009, according to Eurekahedge Pte.
Trivest’s fund aims to return 15 percent to 20 percent annually after fees by trading Chinese stocks. It will mostly trade Chinese securities listed on international stock exchanges, as well as some Chinese-listed shares, the people said.