Former Hedgie Eyes Shadow Banking Sector

Oct 19 2012 | 11:28am ET

Daniel Zwirn, who closed his $6 billion hedge fund DB Zwirn in 2008, is looking to the shadow banking sector.

Zwirn, who closed his fund after an internal review revealed problems with fund transfers and expense accounting, is in talks with strategic backers, according to the Hedge Funds Review.

His new venture is based on his belief that private investors need to take the place of banks in providing credit to middle-market companies. Zwirn argues the illiquidity premium to be earned on such loans has risen dramatically:

"We're talking about one- to three-year middle market or small loans secured against corporate, real estate, consumer or structured finance assets," Zwirn told HFR. "The natural buyers of this risk are banks, or in certain cases insurance companies, but they have been forced to exit this business. As a result, the illiquidity premium is enormous."

Zwirn is considering a variety of illiquid credit strategies including special situations corporate lending, real estate lending, unsecured consumer lending and legal and insurance finance. His fund may also buy distressed debt and non-performing loans.

Moreover, he intends to structure funds to reflect the duration of underlying loans and assets, offering investors a choice of structures, from private equity to hedge funds to hybrid vehicles.

Zwirn told HFR the most attractive opportunities could be "in the space between hedge funds and private equity.”

"Investors willing to take positions that are 18–30 months in duration could do very well," he said.


In Depth

Hedge Fund Veteran Peter Borish Talks Trading

Dec 17 2014 | 9:32am ET

Peter Borish says 2014 was “tricky” from a trading perspective. “The best...

Lifestyle

Cohen Donates $1.5M To GOP Governors Association

Dec 10 2014 | 7:13am ET

The Republican Governors Association raised close to $25 million from October 1...

Guest Contributor

Q&A With Daniel Gallancy: Institutional Interest In Bitcoin Is Growing Steadily

Dec 12 2014 | 7:54am ET

Daniel Gallancy is founder and CEO of SolidX, a provider of total return swaps for...

 

Sponsored Content

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

December 2014 Cover

Futures 2014 person of the year

Jeff Sprecher was simply looking for a platform to trade energies when launching ICE 14 years ago but it has grown to reach the pinnacle of both the listed futures and equities world.

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.