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First Avenue Eyes $750 Million for Fund of Hedge Funds

Date: Wednesday, February 13, 2008
Author: Reuters

Alternative investments firm First Avenue Partners said on Monday it planned to raise up to $750 million (384 million pounds) for a portfolio that will invest with start-up hedge funds, as well as funds that have seen heavy outflows.

The FAP Hedge Fund Opportunities fund, which has been launched with 100 million euros (74 million pounds) of capital from German firm Gothaer Insurance -- a minority shareholder in First Avenue Partners -- will be managed by Chief Investment Officer Oliver Bergmann.

It will aim for returns of around 15-20 percent a year by investing around $25 million or more with start-up hedge funds, as well as funds that need an injection of assets to be able to attract other investors, and funds that have suffered investor redemptions but still look attractive.

First Avenue founding partner Christian Benigni said the difficulty that many smaller hedge funds face in attracting investors, along with a growing number of funds seeing outflows, presented opportunities.

"The hedge fund industry is consolidating. It seems the larger hedge funds have no problems at all gathering assets, whereas smaller funds are finding it increasingly difficult," he told Reuters.