Former Och-Ziff Managers Said to Plan Own Asia Hedge Fund
Stock Chart for Och-Ziff Capital Management Group LLC (OZM)
Manoj Jain and Sohit Khurana, two former managing directors at Och-Ziff Capital Management Group LLC (OZM) run by Daniel Och, plan to start their own Asia hedge fund later this year, said four people with knowledge of the matter.
Maso Capital, their Hong Kong-based company, plans to raise $250 million for the event-driven and convertible-bond-arbitrage fund, said two of the people, who asked not to be identified as the information is private. Jain and Khurana declined to comment.
Some managers and traders in Asia are leaving global hedge funds and investment banks to set up their own funds, even as two worst years of performances and more selective investors kept the Asian industry’s assets 22 percent off its 2007 peak. Jain and Khurana are also starting their own regional-focused hedge fund as the European debt crisis spreads and economic growth is slowing in the U.S. and China.
“Because they have come from a large, successful and institutional hedge fund, they may be a little insulated about how challenging it is to raise assets for a small fund,” said Alex Mearns, chief executive officer of Eurekahedge Pte, a Singapore-based data provider. “There’s the overwhelming entrepreneurial desire to run your own business.”
Carl Huttenlocher, the former Asia head of Highbridge Capital Management LLC, and Morgan Sze, a former Goldman Sachs Group Inc. proprietary trader, helped new Asia hedge funds to raise $4.43 billion last year, the highest amount since the industry peaked in 2007, according to a survey by trade journal AsiaHedge.
Jain, 33, was responsible for Och-Ziff’s Asia merger arbitrage, event-driven and capital markets investments such as initial public offerings and additional share sales. Khurana, 39, co-managed the regional convertible bond pool at the New York- based company, which oversees about $29.8 billion globally, before leaving earlier this year.
Event-driven funds seek to profit from securities whose value is affected by events such as mergers and acquisitions, and reorganizations. Convertible arbitrage funds typically buy the bonds and sell borrowed common stock of the same issuer.
Huttenlocher’s Hong Kong-based Myriad Asset Management Ltd. raised $900 million by March 1 for its hedge fund started on Dec. 1. Assets of Sze’s Azentus Capital Management Ltd., also headquartered in the city, topped $2 billion last year, making it the region’s largest hedge fund startup.
Other Hong Kong-based emerging-markets managers who are planning their own funds this year include, Kelvin Woo and Joe Zhang, who left London-based hedge fund GLG Partners Inc. to plan their own Asia-focused macro hedge fund, four people with knowledge of the matter said in April.
Investors channeled almost 80 percent of new capital inflows to the global industry to hedge funds overseeing more than $5 billion in the 15 months to March, according to Chicago- based Hedge Fund Research Inc.
Sixty-two percent of the 1,314 Asian hedge funds tracked by Eurekahedge manage $50 million or less. Of 308 Asian hedge funds started since 2009, 74 percent have failed to boost assets “significantly” and 51 have been liquidated, according to the data from Eurekahedge.
Still, managers who previously worked at large global funds tend to think they can make more money running their own funds, Mearns said. They may have good relationships with investors from their prior employers and may believe they can produce superior returns for their investors in a smaller and more nimble fund, he added.
The OZ Master Fund, the flagship fund of Och-Ziff, lost 0.5 percent in 2011, according to the annual report of the publicly traded company. The HFRI Fund-Weighted Composite Index dropped 5 percent in 2011 in the second-worst year for the global industry amid concerns about the European debt crisis and a global recession. The OZ Asia Master Fund dropped 3.8 percent last year, outperforming the 8 percent decline by the Eurekahedge Asian Hedge Fund Index.
The OZ Master Fund allocated 17 percent of its $20.2 billion in assets to Asia, Australia and New Zealand at the beginning of this year, according to the annual report. The OZ Asia Master Fund oversaw $1.6 billion at the end of December.
The Wall Street Journal reported on the new fund earlier today.
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