Portman Square Capital LLP, founded by ex-Citigroup Inc. proprietary-trading unit head Sutesh Sharma, opened with less than a fifth of the amount the hedge fund originally sought, said two people with knowledge of the matter.
The firm began trading in May with less than $100 million, compared with the $500 million the firm initially targeted, said the people, who asked not to be identified because the figure hasn’t been made public. The firm scaled back its target in March, people with knowledge of the talks said at the time. Sharma, 50, declined to comment by e-mail yesterday.
Portman Square uses capital structure arbitrage and volatility arbitrage trading techniques, and seeks to profit from pricing differences among related securities. The fund has gained 3.6 percent since opening in May, another person with knowledge of the pool said.
Hedge fund startups are struggling as Europe’s sovereign debt crisis deters investors from backing fund managers without a track record. Only 38 percent of 730 hedge fund investors surveyed in March by Goldman Sachs Group Inc. committed money last year to funds that were less than three months old.
The only European hedge fund to start trading last year with more than $1 billion in assets was London- and Zug, Switzerland-based Stone Milliner Asset Management AG, according to a March report from Bank of America Corp. The second-largest European hedge fund to start trading in 2012 was Stockholm-based Brummer and Partners’ Carve Capital, with $750 million in assets, according to the report.
Sharma co-founded hedge-fund firm Old Lane Partners LP with Vikram Pandit. When Citigroup bought Old Lane in 2007, Sharma became head of a team of proprietary traders and Pandit later was named chief executive officer. At New York-based Citigroup, Sharma oversaw about $2 billion before resigning in late 2011. Pandit left Citigroup in October.