MD Sass Seeds Asian Long/Short, P.E. Natural Resources Strategies

Apr 25 2007 | 1:39pm ET

Asset management firm MD Sass has agreed to seed two new vehicles, a hedge fund and a private equity fund.

The hedge fund is an Asian equity long/short vehicle investing in Taiwan, Hong Kong and greater China. According to MD Sass president Hugh Lamle, two Western-educated Chinese nationals who worked for major investment banks as analysts and managed money for family offices with stellar results are now “ready for prime time” as hedge fund managers.

Meanwhile, the private equity vehicle is a natural resources fund which will make equity investments in mining concerns in Africa, Asia and Latin America. It is being seeded via the New York-based firm’s $273 million private equity fund, M.D. Sass-Macquarie Financial Strategies.

The natural resources private equity fund was started by four former Australian geologists and mining engineers who have spent the bulk of their careers as lending officers for major banks financing reserves, typically metals and metals related.

“They’ve been making loans to these companies and typically when you make a loan you’re making it at a steeply discounted present value of the reserves in the ground,” said Lamle. “Once you get the reserves out of the ground they produce earnings and their stocks ramp up. So this fund makes equity investments in these small public companies in Africa, Asia, Australia and Latin America, and works with them to get the financing, and the equity stake is where we really make our money.”

Both deals were sourced by the Macquarie Group, which joined MD Sass in setting up a private equity emerging manager fund three years ago.

According to Lamle, the firm has a “huge” pipeline of deals this year and is currently looking at alternative energy, healthcare, credit and venture capital strategies.

“It’s just hard to find the right strategies and/or teams. The long/short equity strategy is pretty crowded and we’re looking at a bunch of those but they have to be very special to make it worthwhile,” he said.


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