Credit Suisse Said Raising $2 Billion for Hedge Fund StakesBy and
Anteil Capital unit targeting minority stakes in 10-12 firms
Barclays’s Bhardwaj joins ex-Stanford manager Powers at Anteil
Credit Suisse Group AG is courting investors to raise as much as $2 billion for a fund that will buy stakes in hedge-fund firms, according to two people with knowledge of the matter.
The Zurich-based bank’s Anteil Capital Partners unit will aim to buy minority stakes in 10 to 12 money managers, the people said, asking not to be identified because the information is private. The Swiss bank joins the likes of Goldman Sachs Group Inc. and Blackstone Group LP in raising funds to buy into hedge-fund firms.
Anteil Capital, whose name means “share” in German, is run by John Powers, Stanford University’s ex-endowment chief, and former Blackstone executive Anthony Maniscalco. The division, part of Credit Suisse’s asset-management arm, recently hired Anurag Bhardwaj, the former global head of strategic consulting for Barclays Plc’s prime brokerage, as head of strategic business services.
Regulations since the global financial crisis have imposed stricter capital rules on banks, deterring them from using their own money to trade and forcing them to shut or separate proprietary trading desks. While Credit Suisse is focusing on raising external money at Anteil, owning a piece of a hedge fund lets banks profit from the fees that money managers generate -- typically 2 percent for management and 20 percent of performance.
For the hedge-fund firms, a high-profile investor can help them win institutional clients, while allowing founders to monetize some of their ownership stakes.
“The hedge fund stake industry is maturing quickly with more than $10 billion chasing suitable investments," said Vincent Bounie, a senior managing director at Fenchurch Advisory Partners who helps money managers strike deals. "It will likely become a mainstream feature for many hedge-fund managers.”
Hedge funds are seeking new sources of capital as investors are fleeing the industry and rebelling against paying high fees following years of lackluster returns. It has been especially difficult for new and smaller hedge funds to expand in such a market as investors have tended to gravitate toward the largest and best-performing managers.
Many hedge funds are also closing down amid the biggest industry shakeout since the financial crisis. About 530 funds closed in the first half of 2016, and investors pulled a net $28 billion from hedge funds in the third quarter, the most since early 2009, according to Hedge Fund Research Inc.
Anteil Capital will compete to buy minority hedge-fund stakes with the likes of Dyal Capital Partners, Blackstone and Goldman Sachs Group’s Petershill unit, which beat its initial $1 billion target for its second fund earlier this year.
— With assistance by Bei Hu