Highbridge to seek $250M for Asian hedge fund

The JPMorgan Chase unit hopes to return to the market more than two years after shutting a predecessor fund.

Oct 22, 2013 @ 9:33 am

Highbridge Capital Management, the JPMorgan Chase & Co. unit that manages about $31 billion, is starting an Asia hedge fund, returning to the market more than two years after shutting a predecessor fund.

Highbridge plans to raise about $250 million for the Pan Asia Multistrategy Fund when it opens to investors next year, two people with knowledge of the matter said. They asked not to be identified because the information is private.

The fund is led by 32-year-old Asia head Arjun Menon, who is based in Hong Kong, according to a document seen by Bloomberg News. Queenie Tsao, a spokeswoman for Highbridge at RLM Finsbury Ltd., declined to comment on the plan, citing legal restrictions.

The firm liquidated the $1.5 billion Asia Opportunities Fund after former Asia head Carl Huttenlocher left in March 2011 to start his own hedge fund company, Myriad Capital Management Ltd. The new Asia fund will focus on exploiting pricing gaps between related securities, taking less risk than its predecessor, the people said.

The money Highbridge allocated in Asia to this investment approach, known as arbitrage, returned 25% between February 2011 and September, one of the people said. The performance is being used to market the new fund, which is overseen by a six-member investment team led by Mr. Menon, according to that individual. That compares with the 12% return by the Eurekahedge Asian Hedge Fund Index over the same time period.

Investor Demand

The new fund is opening amid an increase in investor demand for experienced hedge fund personnel after the 2008 global financial crisis. About 43% of institutions would not invest with managers with a track record of less than two years, an annual Deutsche Bank survey in February showed.

Mr. Menon's team has been running the new Asia fund with only Highbridge's allocation since May and has yet to opening the fund to outside investors, said the people. They will continue to manage regional investments for Highbridge's global fund, they added.

The fund will use strategies including credit and convertible arbitrage, equity long-short and capital structure relative value. The team will be able to allocate assets to the best opportunities across geographies and asset classes, according to the document.

Equity long-short funds bet on rising and falling stocks. Capital structure managers seek to profit from the pricing disparities between securities issued by the same companies. Convertible arbitrage funds typically buy the convertible bonds and sell borrowed common stock of the same issue.

Mr. Menon, who is responsible for Highbridge's Asian convertible, derivatives and credit investments, has been with Highbridge since 2003 and moved to Hong Kong in 2006, according to an official biography in the document. He co-headed the Asian business after Huttenlocher's departure and was made sole head in December 2011.

(Bloomberg News)

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