Morgan Stanley Hedge Fund Spin-Off Wins $500M From Blackstone

Oct 10 2012 | 1:39pm ET

A Morgan Stanley proprietary-trading desk being spun-off as a hedge fund later this year has raised more than $500 million from the Blackstone Group—without giving up a piece of itself.

PDT Partners launched its first fund in June and will fully split from Morgan Stanley by the end of the year, as the bank moves to comply with the Volcker rule, which strictly limits banks' investments in hedge funds. The New York-based firm plans to launch a second fund with about $1.5 billion in January, Bloomberg News reports.

Investors appear to be willing to make some pretty big concessions to get their money into the former process-driven trading desk, led by Peter Muller. Blackstone ponied up its half-billion without demanding a stake in the new firm, as it usually does for such large investments. And Muller has reportedly ruled out fee discounts and imposed a seven-year lockup on some of the $2 billion raised, virtually unheard of provisions in the current hedge fund environment.

PDT has returned an average of 20% a year since its debut in 1993.

Morgan Stanley owns a stake in PDT, less than 5%, although it is unclear whether it will hold on to it; PDT has acquired some Morgan Stanley assets as part of the spin-off. The rest of the firm is owned by its 11 partners, although Muller himself owns a majority stake.

PDT has 100 employees, including CFO Brian Thomas and chief compliance officer Ajay Salhotra.


In Depth

Q&A: Open Season For Closed-End Funds

Aug 29 2014 | 10:00am ET

When Maury Fertig and Bob Huffman, former Salomon Brothers coworkers, launched...

Lifestyle

Och Funds Women In Finance Initiative At U-M

Aug 28 2014 | 3:01pm ET

Och-Ziff Capital founder Daniel Och and his wife have made a "generous donation"...

Guest Contributor

Looking Ahead: What’s In Store For Managed Futures?

Aug 22 2014 | 12:52pm ET

The last five years were phenomenal for investors in equity indices. Will the next...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

July/August 2014 Cover

The time was right

Commodities/Futures magazine launched at the precipice of a revolution in the futures industry—really a revolution in the idea of risk management—that would move it from a small niche industry to ...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.