Benjamin Fuchs, who leads the Global Opportunities Group proprietary trading desk at Nomura Holdings Inc. (8604), aims to start his own Hong Kong-based hedge fund with at least $400 million, said two people with knowledge of the plan.
Nomura, Japan’s largest brokerage, will back the “commingled” fund being planned by B.A.F. Capital Management, the company named after Fuchs’s initials, with as much as $200 million, according to a marketing document seen by Bloomberg News. A commingled fund pools assets from different investors rather than keeping them in separate accounts.
The group, part of Nomura Principal Investments Asia Ltd., will start operation separately as B.A.F. later this year, said the people, who declined to be identified as the information is private. B.A.F. will have 24 employees including 13 investment professionals, the document said.
“Sophisticated investors want to invest with managers with a proven track-record of generating alpha in Asia,” said Joseph Pacini, head of alternative investments of JP Morgan Private Bank in Asia. “Some investors are viewing the recent spin-offs of proprietary trading desks into hedge fund firms differently than a traditional start fund. Some of these managers are bringing entire teams with them and are only leaving given regulatory changes.”
Hong Kong-based Fuchs declined to comment, and referred inquiries to Nomura’s corporate communications staff. Felicity Albert, a Nomura spokeswoman in Hong Kong, declined to comment.
Fuchs and his team are leaving Nomura after global hedge fund industry assets topped $2 trillion for the first time. An estimated 298 new hedge funds started in the first quarter, making it the busiest three months for new hedge funds since 2007, according to Chicago-based Hedge Fund Research Inc.
Azentus Capital Management Ltd., a Hong Kong-based hedge fund led by Morgan Sze, has raised $1.9 billion since it started trading in April. The majority of his staff worked in the Goldman Sachs Group Inc.’s Principal Strategies proprietary trading group that he once headed.
The Global Opportunities Group was initiated by Lehman Brothers Holdings Inc. (LEHMQ) in August 2007 to set up an Asia-based internal fund to trade global assets, Fuchs said in an August 2009 interview. It was reborn when Nomura took over Lehman’s Asian assets following the U.S. investment bank’s collapse in September 2008. It started trading in mid-April 2009 with $300 million of capital from the Japanese company, focusing on Asia- Pacific securities, he added.
B.A.F. is estimated to have returned 49 percent in 2009, 21 percent last year, and 1.6 percent in the first five months of 2011, said the document.
Nomura will also provide a working capital loan to B.A.F. to enable its start up, one of the people said.
B.A.F. will trade equity-linked products such as convertible bonds, equity volatility and credit, according to the document. It will focus on Asian investment themes with the possibility to benefit from global opportunities, it added.
The B.A.F. fund will target an annual return of 15 percent to 20 percent after fees, according to the document.
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