Alibaba Founders-Backed Firm Said to Mull Seeding Hedge Fundby
Blue Pool may back ex-Balyasny Asia head Abraham’s hedge fund
Alibaba’s Ma, Tsai said among clients of Blue Pool Capital
Blue Pool Capital, which invests billions of dollars for wealthy clients including two top Alibaba Group Holding Ltd. executives, is in advanced talks to back a new hedge fund that’s being planned by a former Asia head of Balyasny Asset Management, according to people with knowledge of the matter.
Avinash Abraham, who left Balyasny earlier this year, plans to start a pan-Asia hedge fund in November through his firm, Torq Capital Management (HK), said the people who asked not to be identified as the discussions are confidential. The market neutral fund will bet on rising and falling stocks, said the people, who didn’t provide details of the size or terms of the investment.
Finding high-profile backers is becoming more difficult for hedge funds that have been beset by volatile markets. Asia-based hedge funds are facing the worst redemption pressures in five years, with investor withdrawals cutting regional industry assets by about 10 percent in the first half, according to eVestment. The region’s managers suffered $6.3 billion of capital outflows in the first six months of the year, the worst among global peers, the data provider said.
Blue Pool manages the fortunes of its Hong Kong-based co-owners Alexander West and Oliver Weisberg, as well as capital provided by Alibaba Chairman Jack Ma and Vice Chairman Joseph Tsai, a few close family friends and Blue Pool’s advisory board members, said the people. The firm this year hired three people from Australia-based Merricks Capital Services to manage an internal market-neutral business that bets on rising and falling stocks, adding to its long-biased equity trading that has been led by West, they added.
Jim Wilkinson, an external spokesman for Blue Pool, declined to comment.
Blue Pool is among a new type of Asian money managers that combine the long-term capital provided by wealthy families with the organizational structure of independent investment firms. New wealth in developing economies such as China and India helped catapult the number of individuals with investable assets of at least $1 million in the Asia-Pacific region to 5.1 million in 2015, surpassing North America, according to a report by RBC Wealth Management and Capgemini.
Ma, who built Alibaba into China’s largest e-commerce company, ranks as Asia’s richest man with an estimated personal fortune of more than $32 billion, according to the Bloomberg Billionaires Index. Tsai has a net worth of more than $5 billion.
West, who co-founded Blue Pool with Tsai in 2004, and Weisberg, a former managing director at Ken Griffin’s Citadel, analyze global economic and market trends to make decisions on allocations to different asset classes and geographies. Other individuals, including Ma and Tsai, are passive investors, said the people.
Once a hedge-fund manager with more than $1 billion of assets, Blue Pool reduced outside capital in 2008 and 2011. It now makes both public and private-equity investments exclusively for its existing clients, either directly or through allocations to outside funds, the people said.
In addition to internal trading, Blue Pool last year hired Sydney Zhang, an alumnus of Pacific Alternative Asset Management Co., to lead the business of parceling out money to hedge funds in the U.S. and Europe. It is also occasionally seeding startups of industry veterans, said the people. Seeders provide startup capital to new hedge funds in exchange for either an equity stake or a share of fee revenue.
Torq would mark Blue Pool’s second seeding deal in Asia. In 2014, Blue Pool pledged the bulk of a $100 million commitment to former SAC Capital Advisors manager Andrew Bazarian’s Pinyin Capital Management Hong Kong. Both Torq and Pinyin will be firms independent from Blue Pool.
Abraham will lead Torq and act as a fund manager himself, with plans to add more managers later this year, said the people. He worked with Weisberg a decade ago at Citadel, said the people.