Citi Prime Brokerage Vets Expand Seeding Op. To Asia

Mar 14 2013 | 12:04pm ET

A hedge fund seeder founded by three former Citigroup prime brokers has picked its first two Asian hedge funds.

London-based Ivaldi Capital will back the funds, which will begin trading in the first half, Bloomberg News reports. One of the seedlings will employ a quantitative equity market-neutral strategy and the other will focus on the telecommunications industry. Both are awaiting Ivaldi's approval from the Monetary Authority of Singapore to begin trading.

Ivaldi opened an office in Singapore in December. It eventually hopes to have five seedlings in Asia, in addition to the six equity teams it has already hired in London. The firm also plans to add non-equity traders in London later this year.

Ivaldi is led by CEO William Potts, Todd Johnson and Nick Jarrett, who founded the firm in 2009. Potts was European head of prime finance sales at Citi, which has a minority stake in Ivaldi, Johnson European head of prime brokerage and Jarrett global head of prime finance technology.

Ivaldi looks for managers who formerly worked at other hedge funds, so-called second-generation managers. After two years, successful managers are permitted to seek outside capital, with Ivaldi providing marketing expertise.

"It is proven early-stage or second-generation managers outperform over time," Potts told Bloomberg. "With the lack of seed capital, closure of proprietary desks and, in Asia specifically, a seeming reduction of funds' presence, we have an enormous opportunity."

The firm's clients are currently exclusively European public pension funds, although it plans to seek investments from sovereign wealth funds, insurers, foundations and endowments.

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