RMF launches innovative seeding fund for hedge fund start-ups
Switzerland's RMF Investment Management, a subsidiary of giant UK-based hedge fund manager Man Investments, has unveiled a seed-funding approach that aims to ensure guaranteed access to new top-tier hedge fund managers.
The firm has launched a new fund, RMF Global Emerging Managers, which it says represents a change from the traditional approach to seeding hedge fund start-ups. The fund aims to deliver hedge fund returns enhanced by revenue-sharing schemes with the managers; in addition to delivering performance returns, the managers will share with investors a fixed proportion of their gross revenues for a defined period.
The approach improves the risk/return characteristics of the Global Emerging Managers fund by dampening downside volatility and offering higher upside potential compared with traditional funds of hedge funds. RMF says the new product provides better exit and liquidity terms than private equity-like seeding funds, with investors receiving a clear and transparent pay-out schedule with steady cash flows.
RMF Global Emerging Managers will follow a rigorous investment process to seek out hedge fund entrepreneurs offering deep experience and extensive hedge fund management background, the business and asset-gathering skills to build a profitable organisation, a strong operational infrastructure and an experienced chief operating officer.
The fund has made its first two investments. RMF says it plans to increase its portfolio to between eight and 10 investments over the first 12 to 18 months.
'RMF offers an innovative financing technique for new hedge funds to stimulate their growth,' says Hans Hurschler, head of hedge fund ventures. 'It is a true alignment of interest. RMF is profiting from the growth of the start-ups and the owners have a higher incentive to build their business on performance.'
The Swiss manager says its industry network is essential for the fund in order to source its investment opportunities. It believes the proprietary investment model will give RMF the ability to attract top-tier hedge fund start-ups through alignment of interest.
RMF, which specialises in alternative investments, notably hedge funds and convertible bonds, has its headquarters in Pfäffikon in Switzerland and offices in London, New York, Singapore and the Bahamas. The firm was launched as a hedge fund manager in 1992 and now manages more than USD25.4bn in assets, mainly for institutional investors. RMF's hedge fund ventures team was established in 2001 and today comprises five investment professionals dedicated to seeding.
Man Group employs 1,600 people in 13 countries, with key centres in London and Pfäffikon and offices in Chicago, Dubai, Hong Kong, Montevideo, Nassau, New York, Singapore, Sydney, Tokyo and Toronto.
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