The New Big Boys Club

Mon Jan 17, 2011


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2011 is setting the scene for Asia’s own post-crisis billion dollar club


By Aradhna Dayal

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As Asia reels under an unusually chilly bout of winter, several positive developments are casting a warm glow of hope on the Asian hedge fund industry.

In line with AsiaHedge’s prediction, a number of high-quality post-crisis start-ups and re-launches are beginning to scale up and reach the landmark of $500 million or more in assets, and are in the process of either soft or hard closing. Leading the pack is Nick Taylor’s Senrigan, which is believed to have crossed the $800 million mark, while Davide Erro’s Turiya Capital as well as John Ho’s Janchor Capital have each accumulated over $500 million.

This is a watershed event – one that just might prove to be a turning point in the slowly recovering Asian hedge fund industry, and provide it with the first set of domestic managers that have the capacity, scalability and institutionalisation to attract the top-notch global allocators. In short, Asia is on the verge of getting its very own post-crisis, home-grown billion dollar club.

A further spillover effect is coming from the soft closes of many large international hedge funds with Asia components (which gained most of the inflows last year) – which is benefiting a number of the highly skilled, older Asia hedge fund hands; several of them, such as Ophelia Tong’s HT Capital and Andrew Main’s Stratton Street, are gaining serious traction and are on their way to soft/hard closes again.

Then there are niche firms such as the Hong Kong-based global macro specialist Ortus Capital Management and Greater China-focused Prime Capital, which too are attracting strong inflows and moving towards the $2 billion mark. These players have been around a long time and biding their time, but are now reaping the rewards of generating strong performance during the global meltdown, and unveiling ambitions to create world-class platforms.

Add to this the new wave of high-profile start-ups, mostly prop desk spin-outs, that are expected to hit the Asian marquee this year, and it is clear that Asia is headed towards offering a fertile mix of locally based but global quality managers, and with diverse investment opportunities.

Prominent among these will be Morgan Sze’s Azentus (a spin-out from Goldman Sachs), Charlie Chan (the former Credit Suisse star trader) and Seth Fischer (former CIO of DKR Oasis). These launches should be sizable and will rejuvenate the Asian start-up scene once again after a rather lacklustre 2010 (when most of the high-quality launches had been planned or delayed from the previous year).

In line with this trend, in this edition of AsiaHedge, we bring you an introductory piece on the historically low-profile Ortus, which believes that there is significant alpha to be generated from the global currency space, as well as an update on Turiya Capital. Also making for an intriguing read is a feature on Value Partners, where founder Cheah Cheng Hye gives a tongue-in-cheek account of the firm’s evolution from a "hobby shop to indulge our passion for value investing" to one of Asia’s largest asset managers running $7.8 billion in assets.

On the investment front, though, Asian managers will continue to face significant challenges, such as the alarming inflation that is spawning in major cities across the region, China’s cooling-down measures and, internationally, the continuing clouds over the European and the US economies.

A few pluses, on the other hand, include the fact that corporate earnings are looking healthier than ever in Asia, domestic consumption continues to be strong and QE2 will continue to be nothing short of an adrenaline shot for the Asian markets.

AsiaHedge brings you a detailed 'Curtain raiser for 2011’ in this issue, debating how the market dynamics will play out in areas such as the macro-economic climate, regulation changes and capital raising.

Finally, AsiaHedge is introducing a series of regional roundtables that will bring to the fore the pertinent issues in various Asian markets. We kicked off with a high-powered COO Roundtable in Hong Kong this month – and look forward to bringing you full coverage of that in February.

Here’s wishing all our readers a fulfilling and successful 2011.

ISSN: 2151-1845 / CDC10004H