Perella Weinberg Buys Hedge-Fund Firm Xerion Capital

Date: Tuesday, October 2, 2007
Author: Jenny Strasburg and Adam Satariano, Bloomberg

Oct. 1 (Bloomberg) -- Perella Weinberg Partners, the investment bank founded by Joseph Perella, bought Xerion Capital, a New York-based hedge-fund manager that invests in the debt of distressed companies. Terms weren't disclosed.

Xerion founder Daniel Arbess, 46, will join Perella Weinberg as a partner and bring the rest of his investment group, which oversees more than $400 million, the firms said today in a statement. Xerion will initially manage $100 million for Perella Weinberg, which has offices in New York, London and Austin, Texas.

Perella Weinberg's asset-management unit has investments in clean-energy technology, European real estate, and industrial and consumer companies. It follows banks including Morgan Stanley and Lehman Brothers Holdings Inc. in buying or taking stakes in hedge-fund managers to increase fees and offer clients additional investment choices.

``This acquisition represents a cornerstone in establishing a broader presence for the firm in the credit markets,'' Perella founding partner Terry Meguid said in the statement.

Expanding Perella Weinberg's investment strategies will help the firm's banking business, and vice versa, William Kourakos, a founding partner, said in an interview. The purchase was reported earlier today by the Financial Times.

Morgan Stanley, Goldman

The firm started in 2006 with about $1.1 billion, led by former Morgan Stanley mergers-and-acquisitions executive Perella and Peter Weinberg, who previously ran Goldman Sachs Group Inc.'s European business. Xerion, started in 2003 with backing from Greenwich, Connecticut-based hedge-fund firm Paloma Partners LLC, focuses on distressed debt and companies going through mergers and reorganizations.

Hedge funds are largely unregulated investment pools that can bet on falling as well as rising asset prices. Their managers gain substantially from profits on money invested. Funds globally oversee more than $1.7 trillion, according to Chicago-based Hedge Fund Research Inc.

In the past year, Morgan Stanley purchased stakes in Avenue Capital Group and Landsdowne Partners LP and acquired FrontPoint Partners LLC. Lehman bought 20 percent of D.E. Shaw & Co. in March.

To contact the reporters on this story: Jenny Strasburg in New York at jstrasburg@bloomberg.net ; Adam Satariano in San Francisco at asatariano1@bloomberg.net