Investcorp Considers Seeding Hedge Fund Saplings

May 21 2010 | 11:23am ET

With mid-sized hedge funds finding fundraising a tough go lately, one prominent hedge fund investor may soon be seeding saplings.

Investcorp is already active in seeding new and emerging hedge funds. But the firm is now looking at funds that already have as much as US$500 million in assets, considering what would be, in effect, a second seeding.

“We’re getting approached by funds running $400 million to $500 million, saying, ‘We need to go the next level and we need a partner like Investcorp,’” Deepak Gurnani, head of hedge funds at Investcorp, told Reuters.

“It’s something that we’re seriously looking at,” Gurnani added. “We’d love to work with these funds.”

According to Gurnani, such funds are “languishing,” but an investment from a firm like Investcorp could both reassure existing investors and give a firm the visibility and stability to attract new institutional investors.

As with traditional seeding, Investcorp, which has yet to re-seed a mid-sized manager, would take a portion of its revenues in addition to investing in its fund.


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