MD Sass Teams Up With Macquarie To Expand Fund Incubation Business

Aug 11 2006 | 12:00am ET

New York-based investment management firm MD Sass has teamed up with financial services firm Macquarie Group to manage a $273 million private equity fund that invests in emerging managers. The fund, which was originally launched by MD Sass in 2004 to make seed investments in specialized fund managers, been renamed M.D. Sass-Macquarie Financial Strategies, L.P.

Steven Shenfeld, senior managing director at MS Sass, said the fund will continue its current strategy of providing funding and operational support to emerging managers. The fund has already backed four asset management firms—Ascent Real Estate Advisors, Waterfall Asset Management, Energy Arbitrage Management and Denahi Global Investments—and plans to seed another 10-15 in the coming years.

“We have a broad and diverse approach,” said Shenfeld, “while hedge funds are an active part of our practice, and two of the four managers we are seeding are classic hedge funds, we are open to seeding private equity funds and long-only funds.”

Currently, Shenfield and the firm’s two other principals, Martin Sass and Hugh Lamle, are looking at fund managers in the quantitative, statistical arbitrage, healthcare, emerging markets, and energy-focused spaces, although they are open to other areas as well.

In the new partnership with Macquarie, Shenfeld, Sass and Lamle will continue to manage the fund and run the day-to-day operations, while Macquarie, which will invest $110 million over the fund’s investment period, will sit on the board, sharing governance with the fund’s management company.

Shenfeld said that teaming up with Sidney, Australia-based Macquarie gives New York-based MD Sass more of a global footprint. MD Sass has over $8 billion in assets under management in a combination of private equity, hedge funds and separately managed accounts, while Macquarie provides specialist financial and investment banking services and its assets under management total $111 billion. 

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