SGAM's Alternative Investment unit, headed by Arié Assayag, has launched Starway, a hedge funds incubator with a difference.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
Unlike many other incubators, Starway will not focus on start-ups but will concentrate instead on good managers who have already built up a track record but lack the business skills to grow their funds under management.
Assayag said: "Starway comes at a time when institutions are beginning to realise that there is untapped potential in identifying managers with solid track records who will be the winners of the future. Starway will identify and work with these managers, using a partnership approach to overcome their weaknesses in marketing and raising funds and help build their businesses into significant hedge fund entities."
"We are looking for managers with solid experience of managing money in a hedge fund format who are looking to start their hedge funds or to accelerate their existing business. We are not looking for managers from capital markets or investment banks who are looking to try the hedge funds experience."
Assayag added: "We don't want to go through the long path of taking on start-ups with less than USD 50 million as the risks are much higher. We are looking for existing managers who need a partner to help build their business rapidly. We are prepared to invest between USD 50 million and USD 150 million in the right managers because we fell strongly that they will have a higher probability of success if they have the right critical mass, typically around the USD 200-300 million level."
Starway is structured as a Cayman-domiciled master-feeder fund of hedge funds, with onshore and offshore components.
Launched out of SGAM AI's New York-based FoHF operation, Starway is now at the pre-marketing stage, with SGAM AI seeking to raise between USD 500m-USD1 billion following the launch of the fund's formal marketing programme in September.
Starway has already identified two managers who are now in the pipeline, and seeks to have 10 managers with the first 12-18 months with an average investment of USD100 million.
SGAM AI has set up an investment committee based on its existing team as well as new members recruited specifically for the Starway project. The investment committee will focus mainly on opportunities in the <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />US and in Europe, targeting potential managers who can have an immediate impact in terms of performance.