Eric Mandelblatt expects to have raised at least $500 million when his Soroban Capital Partners LLC begins trading stocks next month, according to two people with direct knowledge of the New York-based hedge-fund firm.
At least two other managers, Mark Carhart and Pierre-Henri Flamand, are slated to open in coming months with half a billion dollars or more each, said the people, who asked not to be named because the firms are private. Helping all three traders pull in at least 10 times more than most hedge-fund startups this year may be one line on their resumes: Goldman Sachs Group Inc.
“It’s an incredibly difficult environment,” said Emma Sugarman, head of the U.S. capital introductions group at BNP Paribas SA in New York, which helps hedge funds meet investors. “There does, however, seem to be an appetite for people who have a certain pedigree.”
The $1.6 trillion hedge-fund industry attracted a net $23.3 billion in the first half, a pace that would make 2010 the third-worst year for deposits into the private investment pools since 2001, according to Chicago-based Hedge Fund Research Inc. Most new funds are raising $30 million to $50 million, according to bankers who work with startups.
The three former Goldman Sachs managers have what many investors in new funds are looking for, including a strong track record and a team who they’ve worked with in the past, said Larry Chiarello, a partner at SkyView Investment Advisors LLC in Shrewsbury, New Jersey. Investors are also gravitating toward startups with full trading and administrative staffs.
Carhart’s New York-based Kepos Capital LP has 27 employees, while Flamand’s Edoma Capital Services Ltd. in London has a payroll of 24, according to the people briefed on their plans.
Executives at the three firms all declined to comment.
The fundraising success of traders with a Goldman Sachs pedigree may bode well for others who leave as the New York-based bank disbands its principal-strategies business to comply with new U.S. regulations aimed at curbing risk.
The head of that group, Hong Kong-based Morgan Sze, may start a hedge fund focused on Asia, two people with knowledge of the matter said last month. A U.S. team of proprietary traders from Goldman Sachs has been talking to fund manager Avenue Capital Group, buyout firm KKR & Co. and investment bank Perella Weinberg Partners LP about joining one of those firms.
Mandelblatt, 34, started as an energy analyst at Goldman Sachs in 1998. In 2002, he joined the principal strategies group, which traded the bank’s own money, becoming chief operating officer of the unit’s U.S. business two years later.
After he left Goldman in 2005, Mandelblatt went to TPG-Axon Capital Management LP, where he was co-chief executive officer. He is starting Soroban with Gaurav Kapadia and Scott Friedman, who were both at New York-based TPG-Axon.
Global Alpha Fund
Carhart, 44, will begin trading client money at Kepos in January. He was co-head of Goldman’s quantitative investment- management group and its Global Alpha hedge fund. From 1998 through early 2009, when Carhart left the bank, Global Alpha averaged returns of 12 percent a year. The fund, which bought and sold securities based on computer models, lost 40 percent in 2007 and climbed 2 percent in 2008.
Kepos will also use computers to trade debt, equities and currencies in developed and emerging markets.
Flamand, 40, will open Edoma in November to trade the stocks and bonds of companies going through corporate events such as mergers and bankruptcies. He worked at Goldman Sachs for 15 years and ran its principal strategies group from London from 2007 until he left in March. He is joined at Edoma by former colleagues Ali Hedayat and Emmanuel Niogret.
Former Goldman Sachs traders who founded their own hedge funds include Eric Mindich, who started New York-based Eton Park Capital Management LP with $3 billion in 2004, and Dinakar Singh, who left the investment bank in 2004 to co-found TPG-Axon.