Goldman Sachs Said to Start Hedge Fund for AsiaBei Hu
Goldman Sachs Investment Partners, set up to allow clients to invest with some of the bank’s top proprietary traders, is raising capital for a new Asian fund, said two people with knowledge of the matter.
The fund, named Oryza Capital, started early this month, said the people, who asked not to be identified because the information is private. It is overseen by a team led by Hideki Kinuhata in Tokyo and Hong Kong-based Ryan Thall, said the people, who didn’t disclose how much money the fund is seeking to gather. Kinuhata and Thall didn’t reply to e-mails seeking comment on the new fund. Connie Ling, a Hong Kong-based spokeswoman at Goldman Sachs Group Inc., declined to comment.
Asia’s economic growth that has outperformed the U.S. and Europe, and renewed interest in Japan, where Prime Minister Shinzo Abe has committed to ending deflation, are attracting global investors. Inflows into Asia-focused funds took regional hedge-fund assets to $98.4 billion as of the end of June, the highest since 2007, according to Chicago-based data provider Hedge Fund Research Inc.
“Asia is still one of the fastest-growing regions in the world, albeit at a slower pace, so it’s no surprise that there is continued interest in notable Asian launches,” Will Tan, a managing director who focuses on the hedge-fund industry at Singapore-based recruiting firm Principle Partners Pte, said. “The past year especially has seen renewed global interest in Japan resulting in a surge in hiring for Japan-focused investment professionals.”
As co-heads of Asia investments at Goldman Sachs Investment Partners, known as GSIP, Kinuhata and Thall managed more than $1 billion of regional holdings for the global fund, said the people. They have generated annualized returns in the low teens, about fourfold that of the global fund since its 2008 inception, they added.
Asian stocks and Japan-focused funds drew $3.9 billion of new capital in the second quarter, more than the $3 billion net inflows to the regional hedge-fund industry, HFR said.
Thall plans to discuss an Asia-focused opportunistic equity long/short fund with potential investors at a Morgan Stanley hedge-fund forum in Hong Kong in October, according to a document seen by Bloomberg News.
The new fund invests in Asia including Australia and Japan, one of the people added.
The Nikkei 225 Stock Average has gained 64 percent in the past year. Japan’s exports rose the most since 2010 in August after the yen weakened more than 11 percent against the dollar this year amid unprecedented stimulus by Abe and the Bank of Japan to rejuvenate the economy.
“More and more intellectual power and international capital are being focused on Japan,” Peter Douglas, principal of Singapore-based GFIA Pte, said. “Five years ago you wouldn’t have had one leg of this proposition based in Tokyo.”
The fund is consistent with banks’ attempts in recent years to turn former proprietary trading units into fee-generating revenue sources, Douglas said.
Goldman Sachs, the fifth-largest U.S. bank by assets, as recently as 2009 generated about 10 percent of revenue from proprietary trading. Goldman Sachs Investment Partners, also known as GSIP, started investing in early 2008 with traders from the principal strategies group as the New York-based bank moved to comply with a provision of the Dodd-Frank financial-overhaul act that curbs banks’ ability to risk capital by betting for their own accounts.
GSIP began with about $7 billion, the biggest hedge-fund startup, and was initially funded with some of Goldman Sachs’s own money, according to fund marketing documents seen by Bloomberg News in 2010. The business now forms part of Goldman Sachs Asset Management, the division that supervises investments for clients.
“Investor interest in managers with backing from institutions with size and solid operations remains quite high in Asia,” said Toshikazu Yamazaki, the senior fund manager at SRF Group Pte in Singapore, which started an Asia-focused fund-of-hedge-funds in December. “Managers who can generate alpha seem to be on the rise now,” he said, referring to returns in excess of those of the benchmarks.
Kinuhata and Thall will continue to run money for the global fund, in addition to the new Asian pool, one of the people said.
Thall, who was previously based in Tokyo, was one of 70 Goldman Sachs employees promoted to partner from the beginning of this year, a designation that gives them a bigger share of a bonus pool. Kinuhata also made partner, according to a list internally announced in October 2008.
GSIP also has investments in credit, distressed securities and hard-to-sell assets globally, in addition to stocks, the 2010 documents showed.