Venus Capital Management in Cambridge, Mass., is marketing a new event-driven fund hedge fundwith a focus on India. The Venus Special Situations Fund, launched on May 1 with $40 million in soft commitments, is designed to capitalize on the inefficiencies of the under-researched event-driven market in Asia, said CEO Vik Mehrotra. The fund will concentrate on mid- and large-cap merger arbitrage and divestment deals in India, but the firm will also consider investments in the pan-Asian market.

Mehrotra said the strategy would be a good fit for foundations and endowments because it generates alpha with minimal risk. Venus is targeting a return of more than 20% with a standard deviation of 8-10%. "We are not your standard raw beta Asia fund," he said. "This is a low-risk strategy that provides downside protection. Foundations and endowments are going to be extremely interested in it."

The fee structure is 2% and 20% and there is no penalty for redemptions. The only requirement for exiting the strategy is 90 days notice. "This is a very liquid strategy so that is why we have such generous redemption terms," Mehrotra said. The firm aims to close the fund at $250-300 million, but that could change. "The universe is growing a lot out there and the capitalizations are rising really fast, so we'll have to see once we get close to those figures," Mehrotra said. "There were $19 billion in mergers [in India] last year and we are predicting that number to be over $25 billion this year." Venus has a six person office in India, led by Aviral Gupta, head of research.

Venus is marketing the fund to the several endowments and pension funds that have already invested in its other two strategies, the Venus Arbitrage Fund and the Venus Acumen Fund. The firm is also working with investment consultants to reach out to other nonprofits.