The Hedgeweek Interview: Taking hedge fund incubation to the next level: Andrew Bourne and Alan Thomas, Bourne Financial
Andrew Bourne, Chief Executive, and Alan Thomas, Legal & Compliance Advisor at Bourne Financial, outline their services for start-up hedge funds.
HW: What is the background to Bourne Financial?
AB: Our background is in property and we've approached this very much from a property angle. We wanted to derive a number of new revenue streams from a property-based model.
We saw a gap in the market whereby young and start-up financial companies found it very difficult to get up and running because of lack of experience in operating their facilities and coordinating multiple service providers.
We've aimed to get new revenue streams from providing these services under one roof while enabling these start-ups to get up and running as soon as possible.
So we're not just providing offices, we are providing a complete infrastructure to enable new managers to 'plug and play' immediately.
In essence, we aim to minimise the initial capital outlay for a start-up. If you take for example voice recording systems, these involve an outlay of GBP 80,000 for a small company - we charge these out GBP 20 per week, this is a significant saving.
HW: Who are you seeking to attract?
AB: For our City of London office at 4 Broadgate we are targeting hedge funds, trading operations, corporate finance firms, IFA networks, as well as mortgage brokers and private client brokers.
AT: A lot of people are also going to walk through our door with unusual business activities that may include raising money for wind farms or managing overseas private equity deals from a London base.
They can walk in a Monday morning, pay the rent, and carry on their business seamlessly.
HW: What is the membership concept that you offer?
AB: This is in fact a licensing agreement - we see our clients less as tenants, but more as members of a club offering a range of services. This is just one of the ways we differentiate ourselves from competing services.
HW: How much can a start-up save by using your services?
AB: This varies from company to company depending on their size and the range of services they take, but typically for a start-up the savings are in the range of GBP 35,000 to 40,000 a year.
AT: If you have two people starting a hedge fund, they can spend a lot of time and money running around finding office facilities, lawyers, accountants, prime brokers and fund administrators - we can help them with assistance for all of these.
HW: What are the key services provide by Bourne Financial?
AB: The key services are as follows:
- Office space and office services, including the latest IT and telephony.
- Legal services including FSA authorisation.
- In-house compliance.
In addition to the above, we provide introductions to:
- Prime brokers
- Execution services
- Accountancy firms
- Fund administrators.
We also assist with capital introductions.
HW: What do you envisage going forward?
AB: The next stage is definitely to set up a seeding vehicle for start-up hedge funds. We are already working on this and expect to have a fund in place by January with a minimum of GBP 25 million.
We might use part of this to absorb other hedge fund incubators who have languished but these plans are yet to be finalised.
AT: We introduce a lot of start-up companies to institutions, and we sometimes find talented managers who may not be good marketers. This is where we can assist them. We spend a lot of time interviewing start-ups before we take them on, and we believe we can create a significant fund of hedge funds under one roof, with the significant economies of scale that this structure brings.
HW: Which hedge funds/start-ups currently use your services?
AB: In a very short period of time - we only launched a few months ago - we have attracted a number of start-ups. Some of these are already up and running and several more are in the pipeline.
One example is Aston Risk Management and another is Gallega Capital Management - both are thriving on our platform.
HW: Do you have plans to expand Bourne Financial's capabilities?
AB: Very much so. We offer services to a number of different financial services companies at our City of London location but we have noticed that several hedge fund managers we have spoken to prefer to operate in the Mayfair area - we are already investigating offices in Mayfair where we will set up bespoke services for hedge funds and we expect to launch this second centre dedicated to hedge funds by early 2005.
We are focused on taking the incubation concept to the next level, offering an all encompassing service to hedge funds at minimal outlay where we minimise our own brand promotion and maximise the potential of each of our clients - we're very proud of the fact that our brand is not visible at our offices so that our clients really feel that they are in their own premises, rather than in ours.
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