Morgan Stanley Brokering More Asia Hedge Fund Seed Deals

May 24 2011 | 12:43pm ET

Seeding Asia hedge fund startups is becoming big business for Morgan Stanley.

The investment bank's prime brokerage is seeing more interest in Asian seeding from institutional and high-net-worth investors, and is in the process of negotiating several deals on their behalf, Hugh Abdullah, head of capital introduction in Asia, told Bloomberg News.

"True hedge fund talent is a scarcer resource out here," Hong Kong-based Abdullah explained. "People always want to find the next winner."

Right now, they're looking for it primarily among event-drive and long/short equity hedge funds, he said. In general, the investors, including funds of funds and specialized seeders, especially from the U.S. and Europe, are seeking to invest between $30 million and $70 million.

"You are starting to see certain people offering much larger tickets," Abdullah said. "However, there are only a handful of groups which can realistically write tickets of $100 million-plus."

Seeders aren't the only ones increasingly interested: The start-ups themselves are actively looking for help.

"In Asia, a number of funds are entertaining using a seeder to boost their assets to the $50 million to $100 million level, just to be viewed as being more investable by other investors," Abdullah said.


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