TPG Capital, the private investment company with $59 billion globally, will buy a stake in Hong Kong’s HS Group Ltd. to form a partnership that will provide long-term capital to startup and newer hedge funds in Asia.
Tim Dattels, managing partner and co-head of TPG Capital Asia, is joining the advisory board of the HS Group fund that provides long-term capital to hedge funds, according to an e-mailed statement from HS Group. A fund-marketing division of Fort Worth, Texas-based TPG has agreed to refer institutional clients to HS Group, according to the statement.
TPG has struck the agreement as global hedge-fund assets hit a record high of $3 trillion, with investors adding $93.3 billion capital to the industry in the first five months of the year, according to Atlanta, Georgia-based data provider eVestment. Experienced managers are leaving global banks and hedge funds such as Soros Fund Management LLC and York Capital Management LP to set up their own hedge funds in the region.
“Asia’s hedge fund industry will see secular growth over the coming years,” Dattels said in the statement. “HS Group’s relationships with the region’s strongest investment talent combined with institutional best practices complement TPG’s vision for the industry.”
HS Group was founded by Michael Garrow, formerly of Blackstone Group LP, and Johannes Kaps, previously a managing director of Goldman Sachs Group Inc. to provide long-term capital and guidance to startups and other smaller, younger hedge funds in the region.
In April, HS Group announced that it is backing Pleiad Investment Advisors Ltd., a Hong Kong-based hedge-fund company being planned by Kenneth Lee and Michael Yoshino, two former Soros Fund Management Asia specialists.
Asia-based hedge-fund managers are courting seeders such as HS Group to help them build funds with sufficient assets and business setup to gain credibility with international institutions, such as U.S.-based pensions and endowments, which are restricted in investing in small funds.
Fifty-seven percent of the 167 regional equity long-short hedge funds, which began trading with less than $50 million, still manage less than that amount after an average of 5.3 years in existence, according to a Citigroup Inc. report in December, which cited data from Singapore-based Eurekahedge Pte.
Formerly known as Headland Strategic, HS Group counts V-Nee Yeh as chairman of the advisory board of the group’s fund. Yeh, a member of the board of the Columbia University endowment, co-founded Value Partners Group Ltd. in 1993 with former journalist Cheah Cheng Hye. Hong Kong-based Value Partners oversaw $10 billion at the end of May, it said in a statement to the Hong Kong stock exchange on June 25.