Fri, 01/10/2004 - 07:11
Mehmet Dalman, Commerzbank's Investment Banking chief, has left to launch an innovative hedge fund-focused wealth management group.
Dalman's new London-based company WMG will bring together a number of businesses, including hedge fund management and wealth management, but also extending to capital raising and incubation for new funds.
Dalman was previously a board member and Head of Investment Banking at Commerzbank AG. He is being joined by a number of former colleagues as well as senior traders and investment banking professionals from other institutions.
WMG intends to serve high net worth individuals, private banks and investment institutions, as they continue to rebalance portfolios and increase their allocations to alternative investments. The company believes that no-one has yet responded by providing the broad range of services demanded by these investors. WMG has devised a scaleable, integrated structure which will be rolled out across centres in Europe, North America and Asia.
The managers believe that the full structure will take up to two years to build. It will begin with a range of single strategy funds, followed by a fund of funds business, supported by asset allocation and due diligence teams. WMG will also buy a number of established firms to accelerate its capital raising and execution capabilities, as well as developing a range of fund-linked securities, for distribution to private banks and family offices.
In the first stage single strategy funds will be launched, focusing on long/short global equity, global macro, Japanese equity and quant-based strategies. A further group of funds, with the objective of offering a full spectrum of risk and return, will follow. WMG already has substantial commitments from investors for its group of funds. Incubation and capital raising services for third party funds will also be launched.
WMG is aiming for a global client base of high net worth individuals, family offices, private banks, hedge funds and institutional investors. The specific services provided will be single strategy funds, funds of funds, fund incubation and capital raising, the structuring of fund linked securities, risk management and research.
WMG's product range will comprise:
* Investment funds
A series of hedge funds aimed at attracting institutional and private money. The funds will comprise global macro, long/short global equities, CB arbitrage, quant-based trading strategies, Japanese equities, fixed-income/credit and CDO funds. In addition, there will be a fund of funds business, investing only in third-party fund managers.
The aim of these funds will be to generate high absolute returns that are uncorrelated both with the market and with each other. This range of funds - within a still wider range of products - will give the client the option to retain his assets within the firm as his sole provider.
* Capital-raising for funds
The market for capital-raising is dominated by the highly competitive prime broker introduction units of investment banks. But more specialised approaches to capital raising - including research, online analysis and portfolio accounting - provide an opportunity to create a branded global service for managers seeking access to a wider range of investors.
WMG will consider incubating new funds, either by seeding such a new fund or by arranging a managed account for the prospective portfolio manager. Its criteria for doing so will be whether, on the strength of its analysis of markets and the industry, it can envisage client demand for a particular new product or class of asset.
* Wealth management
WMG aims to introduce alternative investment strategies to retail clients who have traditionally entrusted private banks with their needs for wealth management services. WMG will maintain the client servicing and discretion characteristic of private banks, while aiming to generate higher expected risk-adjusted returns. This class of investor includes many who are wary of hedge funds that lack sustainable and repeatable returns. Managing clients' risk efficiently with a stress on client service and relationships is a market that WMG will tap into.
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