Hermes BPK, Private Equity Firm Launch Hedge Fund Accelerator

Mar 20 2013 | 12:22pm ET

Hermes BPK Partners has launched a hedge-fund acceleration vehicle with a private equity firm, and picked New York-based Taurasi Capital Management as its first beneficiary.

Hermes BPK, the fund of hedge funds arm of the British Telecom Pension Scheme, has teamed with Seattle-based Northern Lights Capital Group to set up the Accelerator Fund, which has $250 million in initial assets provided by institutional investors.

"As a shop, we have had a natural preference for smaller managers," Hermes co-chief investment officer Mark Barker said. "We believe in the excess returns from small, nimble and hungry managers."

Taurasi apparently fits that bill: A long/short credit fund, it is led by former UBS O'Connor credit strategist Mark Melchiorre. The six-month-old fund has more than $100 million in assets, including Accelerator's contribution, the size of which has not been disclosed.

Taurasi trades only the 100 most liquid high-yield and crossover credits, according to Risk. There are an average of 25 "trade bundles," focused on the U.S., selected through a screening process and fundamental analysis.

"Some have been held from inception in September, some have traded multiple times plus," chief operating officer Tom Takacs said. "It's not that fundamental themes or ideas are changing but because even the most liquid part of market is inefficient, there are a lot of trading opportunities around the edges of our core views."

For Northern Lights, the Accelerator Fund is its first foray into hedge funds. It will focus on deal-structuring while Hermes BPK will handle manager selection.


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