FINalternatives has learned that LRG Capital Group, the investment manager for BayStar Capital Funds, is gearing up to launch the BayStar Capital Special Opportunities Fund. The equity long/short hedge fund will invest in small- and micro- capitalization technology, life sciences, media and communications publicly traded companies.

Evan Kraus, partner, confirmed the firm’s new offering but declined to comment further on the launch.

Baystar focuses primarily on investments in convertible debt and preferred securities with various types of participation rights. In October of 2006, the firm launched the BayStar Capital III Structured Debt fund.

LRG Capital Group is a merchant bank that invests in and provides advisory services to small- to mid-cap public and private companies. With offices in San Francisco and New York, the firm represents companies on equity and debt placements, restructurings, recapitalizations, management buyouts and other strategic alternatives.