Guggenheim Partners has launched Guggenheim Global Trading, a proprietary trading platform with an initial target allocation of $500 million, which will invest capital on behalf of the firm, its shareholders, its affiliates and a small group of institutional investors.
The new unit will be based in Purchase, NY and headed by Loren Katzovitz and Patrick Hughes, both managing partners of Guggenheim Partners. The longer term goal is to allocate as much as $2 billion to GGT. Guggenheim says it will consider raising capital on a limited basis from third-party investors, but only those willing to become equity partners with Guggenheim.
“The current environment affords the firm a unique opportunity to hire seasoned talent out of what is a reshaped Wall Street landscape," said Katzovitz. "As a private firm, we believe there are attractive opportunities to invest capital supporting trading strategies with high probabilities of success, particularly as banks are required to divest or significantly reduce their proprietary trading activities and smaller hedge funds find it uneconomical to continue."
Hughes said that global legislative and regulatory changes have created “a unique timing opportunity with regard to the availability of high-quality traders and trading groups,” and GGT plans to hire 20-25 trading groups over the next 12 months. Guggenheim says GGT may cooperate with existing trading groups but that its preferences will be to build its own strategies.
In 2002, Katzovitz and Hughes founded Guggenheim Advisors (GA), a hedge fund of funds managed account platform. In 2006, a 71.5% interest in GA was sold and subsequently repurchased by Guggenheim Partners. Katzovitz and Hughes have stepped down from their roles at GA in order to launch GGT. GA continues to operate under new leadership.
In addition to its headquarters in Purchase, GGT will have trading locations in Chicago, San Francisco, Geneva and a yet-to-be-determined location in Asia.
Guggenheim Partners is a privately held global financial services firm with more than $100 billion in assets under supervision including management of assets in excess of $85 billion.