Brevan Howard Vet Launches New Credit Fund
With a nod to Copernicus, Andrew Ulmer has launched a niche credit fund anchored by an institutional investor.
Andrew Ulmer has auspicious timing.
The credit investor joined Brevan Howard’s small credit team as a trader in 2008 before the financial crisis. He went on to build out the credit group — which was spun out as DW Partners in 2009 — and generate annualized returns of more than 15 percent. Now Ulmer, who grew assets at DW Partners to $3.5 billion, has launched a niche credit fund after a ten-year bull market.
Ulmer has started his new firm, called 1543 Capital, with $125 million in investor commitments, which includes his own money and capital from an anchor institutional investor, according to sources familiar with the matter. The private equity-style fund, which will target returns between 10 percent and 15 percent with some additional upside, will focus on niche private credit, structured finance, and corporate bonds, according to the sources. Among other things, the fund will also make some equity investments in specialty finance companies like those for private student loans, trade commercial real estate loans and consumer non-performing loans, and make trades related to public financial companies.
“We believe there are multiple regions and sub-asset classes where idiosyncratic lending offers very attractive risk-return characteristics,” Ulmer said in an interview. “I feel it is paramount both to build a seasoned investment team with extensive relationships and to establish a fund structure that is well-suited to capture the opportunity set.”
Ulmer, an astrophysicist who worked at the Max Planck Institute in Munich after getting his PhD at Princeton, named the hedge fund firm for the year Copernicus’s most famous work was published. In 1543, which many now consider the start of the scientific revolution, Copernicus published a book claiming that the sun, not the Earth, was the center of the universe.
The1543 Capital team includes Geoff Williams, who co-ran the commercial mortgage-backed securities, collateralized debt, and commercial real estate loan trading business at Goldman Sachs; former colleague Brian Zola, who was the co-head of structured finance and a partner at DW Partners; and Richard Gannalo, the former U.S. CFO and COO at Cross Ocean Partners.
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According to sources, Ulmer wants to ultimately keep the fund between $500 million and $1 billion so it can invest in opportunities that are too small for the largest credit funds at Blackstone and other big firms.
In addition to running another credit fund, Ulmer served as the portfolio manager of the Brevan Howard — and later DW Partners —Credit Catalyst Fund. Ulmer, with a team of around 10 people, built analytics and a risk framework for investments such as structured credit, asset backed securities, and private credit, including private student loans and commercial loans.
Prior to joining Brevan Howard, he worked on the fixed income proprietary trading desk at Goldman Sachs.