Brummer & Partners, the largest Scandinavian hedge fund, plans to start an event-driven fund that seeks to profit from events such as mergers in the Asia-Pacific region, said two people with knowledge of the matter.
The Stockholm-based firm has teamed up with Scott Collison, a former portfolio manager at Millennium Management LLC’s Asian business, to start Orvent Asset Management Pte in Singapore to manage the fund, the people said, asking not to be identified because the information is private. Collison, Orvent’s chief investment officer, declined to comment.
The fund will start in January with about $150 million in initial capital from Brummer & Partners, the people said. It will be the second Asia-focused strategy that Brummer & Partners, which manages $10 billion, will invest in through its multistrategy fund after it put an initial $50 million into a long-short fund managed by Karakoram Asset Management Pte in 2009.
The Brummer & Partners Multi-Strategy Fund, a global portfolio of the firm’s hedge funds, gained 2.5 percent this year through October, according to data compiled by Bloomberg. Event-driven strategies focusing on Asia returned 9.9 percent this year, outperforming the average Asian hedge fund’s gain of 6.9 percent, according to Singapore-based industry data provider Eurekahedge Pte.
Event-driven funds are among strategies that currently appeal to investors, leading to a “larger proportion of such launches” this year, GFIA Pte said in its latest monthly newsletter.
“Event-driven funds are popular because they can give strong equity-like returns without the correlation to markets,” said Peter Douglas, principal of Singapore-based GFIA, which advises investors seeking to allocate money to hedge funds and runs a wealth-management business. “Each trade is stock- or situation-specific.”
Orvent will have a market-neutral approach by hedging its bets on company events, the people said. The strategy will trade securities affected by events such as announced mergers, earnings surprises, corporate reorganizations and changes to equity index components, the people said.
Collison, 42, was portfolio manager of an internal fund focusing on Asian equity event-driven and arbitrage strategies at Israel Englander’s Millennium in Singapore. He previously managed Rubicon Asset Management’s Rubicon Asia Special Events Fund and was before that an equities and derivatives trader specializing in the region’s markets at Credit Suisse Group AG in Hong Kong, New York and Sydney.
Investors with the ability to provide “substantial seed” capital would invest in managers with a “good track record of managing substantial amounts of hedged capital for good clients,” GFIA’s Douglas said.
Institutional investors are paying more attention to the organizational and risk management setups of managers they allocate money to. There should also be confidence that the manager’s strategy would work in the current climate, Douglas said.
Orvent’s prime brokers are Goldman Sachs Group Inc. and Skandinaviska Enskilda Banken AB, the people said. Collison and two other portfolio managers own 50 percent of Orvent, while Brummer & Partners holds the remaining stake, the people said.
Orvent will be the 11th fund worldwide in the Brummer & Partners platform, according to the people.