AIG, Larch Lane see seeding opportunities in new hedge funds start-up trend

Date: Wednesday, June 4, 2008
Author: Ingrid Smith, Thomson Reuters.com

LONDON (Thomson IM) - AIG Investments, a global asset manager, and Larch Lane Advisors said on Wednesday they have formed a joint venture to provide seed investment for hedge funds, at a time when a trend is emerging of managers striking out on their own.

Mark Jurish, Larch Lane Advisors's CEO, argues that talented investors are now leaving large hedge funds to start their own businesses, 'but many of them have not been able to reach their capital targets.'

He said the current supply and demand imbalance for start-up hedge fund capital represents the best seeding opportunity he has ever seen.

AIG Investments is the asset management arm of American International Group Inc, while Larch Lane is the alternative investment affiliate of Old Mutual Asset Management.

Larch Lane constructs diversified portfolios of hedge funds, negotiates and structures seed investments in hedge funds, and focuses primarily on early-stage funds.

These two alternatives' players said they aim to capitalize on synergies between AIG Investments' global alternative investment and hedge fund capabilities and Larch Lane's specialization in hedge fund seeding.

Therefore, this venture targets hedge fund start-ups, teams leaving established hedge funds and established hedge funds in need of restructuring, the firms said.

The intention is to invest $50 to $200 million per deal across a wide range of hedge fund strategies and geographies, they added.

AIG Investments currently manages over $10 billion of hedge fund assets; it is currently invested in more than 130 hedge funds including emerging managers.

Larch Lane has made a total of 22 seed investments over the course of the last seven years.

Robert Discolo, head of the hedge fund strategies group at AIG Investments said: 'This venture gives us the opportunity to not only invest with up-and-coming managers, but to also participate more directly in the profit growth of a rapidly growing industry.'

By Ingrid Smith: +44 (0) 20 7422 4955; ingrid.smith@thomsonreuters.com.