Europe hedge fund launches bigger than ever

Date: Wednesday, July 27, 2011
Author: Laurence Fletcher, Reuters

* Average size of new launches at record high of $116 mln

* Total assets raised up, number of launches falls

LONDON, July 27 (Reuters) - New European hedge fund launches are starting life with more client capital than ever, data from EuroHedge showed on Wednesday, as investors put their faith in a select band of managers they think can guide them through choppy markets.

The average size of offshore hedge funds launched in Europe during the first six months of this year was $116 million, almost double the $65 million seen in the first half of last year and higher than in any previous six-month period, the data group said on Wednesday.

It's also well above the previous high of $102 million in the first half of 2008, around the industry's earlier peak and shortly before investors began to flee in the wake of Lehman Brothers' collapse.

"Investors are increasingly keen to back proven managers at a time of change and opportunity throughout the financial industry," said EuroHedge editor Nick Evans in the statement.

"There have been many high-quality launches this year, often starting with significant seed investment from some very savvy investors, and the pipeline looks strong for some big new launches in the second half of the year too."

The jump in fund size may also have been driven by a number of proprietary trading desks being spun out of banks, ahead of the implementation of the U.S. Volcker rule, which limits banks trading for their own account.

Such launches are often well-known to investors, as was seen when ex-Goldman Sachs stars Pierre-Henri Flamand and Morgan Sze raised billions for their new hedge funds.

Thirteen new funds have launched with assets of $100 million or more so far this year, EuroHedge added.

While the total number of offshore hedge funds launched in the first half fell to 45 from 58 a year ago, total assets raised by these funds jumped 40 almost percent to $5.2 billion.