Ex-Deutsche Prop Traders Spin Out Multi-Strat Hedge Fund

Apr 2 2008 | 7:05am ET

A group of former Deutsche Bank proprietary traders have spun out from the German bank, launching their own multi-strategy hedge fund shop dubbed Arrowgrass Capital Partners.

The new firm is reportedly looking to raise about $1 billion for its global multi-strategy, multi-asset class offering, the Arrowgrass Master Fund.

According to fund documents, obtained by FINalternatives, the fund will allocate 25% of its portfolio to convertible arbitrage bets, 20% each to volatility arb. and special situations, 15% each to distressed and capital-structure arb., and a further 5% to merger arb. plays. By geography, half of the fund’s investments will be based in Europe, with a quarter dedicated to the U.S., 20% to Asia and 5% to other regions. The fund is reserving 10% of its portfolio for side-pocket investments.

Arrowgrass, which is also running a managed account for its former parent, will have offices in New York and London.

The fund charges a 2% management fee and a 20% incentive fee, with a 12-month soft lockup provision. Its minimum investment requirement is US$250,000 or €250,000.

The Arrowgrass management team includes Henry Kenner, CEO and chief risk officer, Nick Niell, chief investment officer, James Barty, head of macro overlay and Michael Sung Wook Chung, head of event-driven.

Arrowgrass officially spun out from Deutsche Bank’s Omnis trading unit in February.


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