US hedge fund Fortress eyes Asia comeback - sources

Date: Tuesday, May 4, 2010
Author: Reuters

Fortress Investment (FIG.N), one of the world's largest publicly traded alternative asset managers, plans to rebuild its Asian operations and is in the process of setting up an office in Singapore, sources said.

Hedge funds have been making a beeline for Asia, attracted by the region's strong economic growth as well as lighter regulation in Singapore and Hong Kong as Western countries look to tighten the screws on what is still a largely unregulated industry.

Fortress recently registered a company in Singapore, a check with the city-state's Accounting and Corporate Regulatory Authority showed, and lawyers and headhunters said it has sought advice on setting up shop in Singapore and maybe Hong Kong.

"The Singapore office will be for investments. It sounded like they want to start small and slowly build up," a person who had a discussion with Fortress said. He declined to be named as the talks were confidential.

The New York-based firm, which manages over $40 billion following its acquisition of fixed-income asset manager Logan Circle Partners last month, did not respond to queries from Reuters.

Global heavyweights such as GLG and Soros Fund Management are among the funds making a beeline for Asia.

"The main driver for all hedge funds is the opportunity set, and Asia continues to present rich, varied, and constantly developing opportunities," said Peter Douglas, principal of hedge fund consultancy GFIA.

According to Eurekahedge, a Singapore-based fund tracker, hedge funds investing in Asia on average returned 4.01 percent from the start of the year to end-April, following a gain of 26.25 percent in 2009.

Fortress shut its Hong Kong office in June 2009 and downsized its Tokyo operations to just a few traders in the aftermath of the financial crisis, but it has been looking to make an Asian comeback via Singapore.

In December last year, it tried to recruit Galleon Group's Singapore-based equities trading team but they ended up joining CastleBay Capital to set up a long/short Asian equity fund. [ID:nSGE62206Y]

Galleon's Asian business began to wind down last year after the group's Sri Lankan-born founder Raj Rajaratnam was charged with insider trading in the United States.

Fortress managed $31.8 billion in hedge funds and private equity investments at the end of 2009, down from $32 billion at the end of the third quarter. [ID:nN25146500] It will report its first-quarter earnings on Wednesday.