Diamond Billionaire Oppenheimer Backs New Hedge Fund Startupby
South African family seeds 100 million rand to Crawford, Carew
Senqu Capital to start equity long-short strategy in December
The family of South African diamond-mining billionaire Nicky Oppenheimer is backing a new hedge fund to be run by ex-Capricorn Capital Group Ltd. money managers Andrew Crawford and Stephen Carew.
Stockdale Street Ltd., which manages the family’s private-equity interests, is investing 100 million rand ($7 million) in the venture, known as Senqu Capital Pty Ltd., Crawford and Carew said in an interview in Johannesburg, where it is based. The Oppenheimer family founded Anglo American Plc in 1917 and transformed De Beers into the world’s biggest diamond producer.
“We’re backing some really good talent here in Stephen and Andrew and we like the hedge fund model because it can play through the economic cycles in a positive way for investors,” Paul Salomon, a partner at Stockdale, said by phone in Johannesburg. “We expect there to be a lot of capital coming into hedge funds because of the regulatory changes.”
The introduction of new rules a year ago for the industry has opened hedge funds up to more investors in a country which has 2 trillion rand of investments in mutual funds. South Africa’s hedge-funds industry has more than doubled in size over the past five years, with assets amounting to 69 billion rand at the end of June, according to Novare Group Ltd., which does an annual survey on the investment class.
“We both have backgrounds in equities and wanted to run our own fund,” Crawford, the 38-year-old chief executive officer of Senqu, said, adding that the managers will invest their own capital alongside client money. “Regulation changes for hedge funds in South Africa were a catalyst for starting one.”
The new fund, named after the Lesotho term for the Orange River, the longest in South Africa and where the first diamond was discovered in the country in 1867, seeks to raise 750 million rand in its first 2 1/2 years, said Carew, 29, the chief investment officer. The fund will invest in a equity long-short strategy starting by December and begin taking more investments in February, he said.
Equity long-short strategies, which account for almost 62 percent of hedge-fund assets, returned 5.8 percent last year, after gains of 14.7 percent in 2014, according to Novare. That compared with a 5.4 percent total return in the FTSE/JSE Africa All Share Index in 2015 and 3.9 percent decline in the Bloomberg South Africa Local Sovereign Bond Index
The duo left Capricorn in August after being part of an 11-member team that increased South African assets under management from 2 billion rand in 2013 to about 9 billion rand this year, Crawford said. He was a trader and money manager at Investec Ltd. in Johannesburg from 2002 before joining Capricorn in 2010. Carew is a chartered accountant who managed private money before working at Capricorn.