FOR U.S. AND EUROPEAN PENSION FUNDS AND other
institutions, gaining access to emerging hedge fund managers in
Asia is no easy task. Jeroen Tielman, former head of commerce,
strategy and innovation for Cordares (now a subsidiary of Dutch
asset manager APG), wants to change that. Tielman has come up
with a novel approach to researching and potentially seeding
managers half a world away.
In January the founder and CEO of Amsterdam-based IMQ
Investment Management, which runs the hedge fund seeding
vehicle IMQubator, announced that his firm was forming a
partnership with Hong Kong fund-of-hedge-funds shop Synergy
Fund Management. IMQ will advise Synergy on the business of
seeding emerging managers; Synergy will counsel IMQ on sourcing
start-ups throughout Asia. We decided to take this first
step because we see an increasing number of exceptional
managers emerging in Asia, and we see rising interest among
investors in Asia for new talent, says Tielman, 49.
Others have noticed this expanding Asian talent pool
particularly in Hong Kong, which is drawing managers from
Singapore and gaining critical mass thanks to its proximity to
China. Rye Brook, New Yorkbased Larch Lane Advisors, a
seeder of 26 U.S. hedge funds that collectively manage
$3.7 billion, is in talks with several Hong Kong
start-ups. Right now we see Hong Kong in the
ascendance, says head of research Kenneth Stemme.
Tielman wont be venturing into Asia alone. Synergy,
founded in 2010 by one of Hong Kongs most experienced
talent spotters, Eliza Lau, will provide insight into and
perform due diligence on any managers that warrant a closer
look. Before launching Synergy, Lau was CEO and CIO of Hong
Kongbased SAIL Advisors, a fund-of-hedge-funds firm with
almost $2 billion in assets under management.
The managers we look at can be from India to Australia
or Japan anywhere, Lau explains. But she concedes
that one of Synergys strengths is accessing managers in
China. Recently, the firm helped the Shenzhen-based manager of
a successful onshore hedge fund structure an institutional
platform in Hong Kong and an offshore vehicle so that it could
accept international capital.
IMQ brings an innovative style of hedge fund seeding to its
new advisory project. Alarmed by the breakdown of trust
between investors and their hedge fund managers during the
financial crisis, Tielman designed a fund structure that
aligned both parties interests. Instead of demanding a
gross share of a start-ups revenue, which has long been
standard practice, he linked investors and managers as joint
equity owners in the management companies of the nascent firms.
Tielman also saw to it that investors pay a management fee of
only 1 percent and an incentive fee of 15 percent when they put
money directly with the underlying managers.
With the institutional support of APG, which oversees assets
for pension giant Stichting Pensioenfonds ABP and provided
250 million ($330 million) in deployable
capital, Tielman launched IMQ in early 2009. IMQubator has
since helped establish nine European hedge funds. Managers are
expected to locate staff alongside IMQ Asset Management in one
of Amsterdams swankiest office towers and work closely
with IMQs management team.
Although IMQ doesnt provide mid- or back-office
services, its staff advise on everything from regulatory
compliance and risk management to capital-raising. This
model strikes me as one of the most partnership-driven deals
out there, says Willem Appel, co-founder and CEO of
Amsterdams Roodhals Capital, whose first fund, Branta
Solutions Fund, was IMQs inaugural investment.
If IMQs partnership with Synergy begins to yield
promising candidates and prospective investment partners,
Tielman will consider transplanting the firms
investor-oriented management setup to Hong Kong. For now,
though, the lanky Dutchman is in no hurry. Establishing a
foreign operation should never involve a leap of faith,
Tielman says, so were taking the first steps very