Wells Fargo To Redeem From, But Keep, Hedge Fund Overland

Feb 3 2011 | 2:22pm ET

Wells Fargo & Co. will gradually pull its money from its in-house hedge fund but does not plan to split with Overland Advisors.

The San Francisco-based bank currently has about $2 billion invested with Overland, in a separate account segregated from the hedge fund's external investors. Wells Fargo will redeem about $150 million from Overland every quarter for the next three-and-a-half years, Bloomberg News reports.

But unlike some banks, notably Morgan Stanley, Wells Fargo will not spin-off Overland, which will remain part of its asset-management unit. Instead, the hedge fund unit will use the next few years to raise outside capital, which has been difficult due to uncertainty over new government regulations and their impact on Wells Fargo. Overland had raised only $204 million from outside clients when it launched its Relative Value Fund last March; Wells Fargo invested $3.5 billion.

But the newly-enacted Volcker rule strictly limits how much banks can invest in hedge funds, even their own, forcing Wells Fargo and other banks to reconsider their relationships with such funds.

Overland hopes to raise about $1 billion.

"There is some seed money in there from Wells Fargo," bank CFO Howard Atkins told Bloomberg. "Typically what happens is that seed money comes out after a period of time after the business grows, so I think of that as primarily a mechanism for third-party customers."

What is now Overland used to be a proprietary trading desk at Wells Fargo. But the firm moved the 22-member team to the asset management arm last year. Overland is headed by Gordy Holterman and Derek Dunn.


In Depth

Q&A: Rotation Capital's Rothfleisch On SPAC 2.0

Aug 11 2017 | 7:43pm ET

Corporate actions have long been a staple of event-driven investors, but activity...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Star Mountain: Private Lending in the Lower Middle-Market

Aug 14 2017 | 4:45pm ET

Private credit has become one of the most popular alternative asset classes in recent...

 

From the current issue of