Ex-NYC Pension CIO Said to Seek $500 Million to Seed Hedge FundsBy
Teams led by women and minorities will be SevenStep’s focus
Girls Who Invest founder Hingorani partners with Permanens
A former chief investment officer of New York City’s pension plans is seeking $500 million to help women- and minority-led hedge funds get off the ground.
Seema Hingorani, who oversaw investing of the city’s five pensions from 2013 to 2014, is targeting the money to seed five to seven new hedge funds, people with knowledge of the matter said, asking not to be named because the fundraising process is private. She formed SevenStep Capital in April to house the effort, which is a joint venture with asset manager Permanens Capital.
In an interview, Hingorani and Permanens co-founder John Regan said the effort is unique because investors in the fund will help identify and evaluate hedge-fund managers to back. Some institutions, such as public pension plans, have mandates to invest in women- and minority-led funds but lack the resources to properly find and vet the managers on their own, they said.
“This will be a very focused, boutique effort,” said Regan, previously a senior investment officer at Cornell University’s endowment. “We want a select group of clients to ensure a high degree of interaction and involvement.”
The fund will charge investors a 0.5 percent management fee and receive a cut of profits on revenue-share agreements it strikes with the hedge funds in its portfolio, said the people familiar with the details. The fund plans to get breaks on management and performance fees from the hedge funds as their assets grow, the people said.
Regan and Hingorani declined to comment on their fundraising target or fees.
Some public pensions have sought to lower their cost of investing in hedge funds and private equity pools. The California Public Employees’ Retirement System, the biggest U.S. pension, said in 2014 it would stop investing in hedge funds because of cost and complexity.
While New York-based SevenStep’s priority will be to generate risk-adjusted returns expected by its investors, Hingorani and Regan said they also see an opportunity to boost diversity in the industry. Women comprised 9 percent of senior positions at hedge funds in 2016, according to researcher Preqin Ltd. Regan said he was frustrated to think that the “numbers are stacked against” girls like his 11-year-old daughter.
“Rather than continue to search for women- and minority-led funds, we realized that we needed to create them,” said Hingorani, SevenStep’s chief investment officer.
Hingorani, 48, chose the name SevenStep in reference to the seven steps around a fire that a couple takes during a Hindu wedding ceremony to cement their partnership. In addition to signifying a bond, she said the name also represents a step-by-step process that her team will undertake to find, fund and grow hedge funds.
Before becoming CIO of New York City’s pensions, Hingorani oversaw investments in hedge funds and stocks at the pension system, which when she left had about $160 billion in assets.
She and Regan met 15 years ago when they both worked at hedge-fund firm Andor Capital Management. After leaving Cornell in 2011, Regan started New York-based Permanens with Joe Steinberg, then the president of Leucadia National Corp. Permanens, which now oversees $2.6 billion, provides outsourced investment management for endowments, foundations and family offices.
Hingorani is the founder of Girls Who Invest, a nonprofit dedicated to increasing the number of women in asset management roles globally. The organization runs a summer program for college students, where they take finance and investing courses before being placed at paid internships. Vista Equity Partners, Blackstone Group LP, Carlyle Group LP and the Canada Pension Plan Investment Board are among those that have taken the interns.