IMQubator: Best Hedge Fund Seeding Platform
Two more fund managers joined IMQubator last year, taking the total number of seeded funds in its stable to nine. As a leading seeding platform, the business objective of the Amsterdam-based firm is simple: putting investors in control when investing in hedge funds and delivering to them a multiple income stream by investing in emerging managers. Each manager receives a seed ticket of EUR25m, with IMQubator taking a 25 per cent equity stake in the management company.
All funds seeded by IMQubator fall under the umbrella of IMQ Investment Management, which acts as investment manager. According to chief executive Jeroen Tielman (pictured), 2011 saw a couple of new business developments, including early-stage development of a global network of capital introduction specialists.
“These are small independent entities that have high-quality contacts with specific investors,” Tielman says. “When we reach mutual agreement, they’ll get exclusivity for the IMQubator seed funds as well as the IMQubator fund itself.”
This will help address a twofold risk issue for emerging managers. “First, we overcome operational risk by having all our managers operate out of the same location in Amsterdam,” Tielman says. “Second is business development risk (i.e. raising capital). A lot of emerging managers stumble in this area, which our global capital introduction network will look to address.”IMQubator has space for four new investors.
Different limits are set with individual managers to minimise investor-related risk, and it’s this approach to close risk monitoring and business guidance that IMQubator feels adds value for its investors.
The two new funds are iStar, a CTA strategy established by two former AIG traders, and Volvar, a volatility arbitrage fund. Although IMQubator prefers all its funds to operate under the same roof, it has had to make a few exceptions.
One is Cavenagh, which now operates from Singapore since the majority of instruments it trades are Asia-based. The other is Charity & Investment Merger Arbitrage Fund. “This is an all-female team based in Paris,” Tielman says. “It would have been too disruptive to their family life to relocate them.”
The second development last year was the establishment of a mutual advisor relationship with Synergy Fund Management in Hong Kong to identify and seed the next generation of emerging managers coming out of Japan and China.
“We’re only at the first stage of the process,” Tielman says. “We did it because we see more emerging managers coming to market in Asia, and increased interest among Asian institutions in gaining exposure to emerging managers.”
This could result in IMQubator opening a second office in Hong Kong. “If we expand and get more Asian investors in our portfolio, it would make sense to have a second location,” he says.
IMQubator is purely oriented toward the end-investor and everything it does is based on their perspective. Tielman says the aim is to align interests between managers and investors more equally.
“As a seeder we know that we’re connecting with emerging managers at a time of maximum motivation, when they’re looking to prove themselves to the market, and that’s really appealing to investors,” he says. “They’re getting access to a unique moment in the lifecycle of a manager.”
Tielman adds: “We see the award as a real encouragement, and we’re honoured that Hedgeweek’s readers have rewarded us for the second year running. We’re motivated even more to continue on the path we’ve set. This award shows that people value what we’re doing.”
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