ADI, the independent French alternative fund manager founded by Erich Bonnet and Christophe Bourret, has launched a new hedge fund incubator in Paris.
ADI, which was launched in 1998 and now has over EUR 5.8 billion in assets, has creating NewAlpha Advisers, a 100 % owned subsidiary. NewAlpha Advisers expects to shortly launch its first incubated hedge fund, a European long/short equity product.
Nicolas Gomart, CEO of the new entity, joined ADI last summer from Dexia Asset management and has since been joined by a marketer and quantitative analyst. The incubation platform is supported by ADI's experienced team in areas such as legal, operational and client services to create a complete advisory role if required.
Total transparency is demanded of all incubated investment companies ensuring a controlled and low risk environment. The co-founders of ADI, the director of Strategy and Development and the CEO of NewAlpha Advisers make up the fund selection committee who must vote in unanimity.
Sandra Crowl, NewAlpha's Marketing Director, said: "The three key criteria in our selection process are the quality and entrepreneurial skills of the management team; the investment process, which must be well tested; and, the management platform which must have the right critical mass to be sustainable, ideally with a second portfolio manager on the team."
She added: "There are two other criteria for selection that are important in our decision making. They are : marketability (market appetite) for the fund style; and, very importantly, the shared desire for both parties - the seeder and the founders - to enter into a legal partnership or shareholding."
NewAlpha Advisers incubation model is well defined. The incubator takes an economic interest usually in the form of a minority only stake in the start-up investment companies in return for a seed capital allocation of between 5-
EUR 25 million to the new fund.
To incorporate its partners in the incubation project MATMUT and MAAF, 2 large
French insurance companies, a holding company was created by NewAlpha Advisers in March 2004. NewAlpha Participations, is owned 60% by NewAlpha Advisers and 40% split equally between the 2 insurers.
Nicolas Gomart said that well over 40 prospective fund managers have been studied since last year which will be indicative of the pace given the aim to seed 2-3 funds per year.
He added that NewAlpha Advisers is looking for proven capacity to create alpha using alternative strategies and complementary fund styles to those of ADI's relative value funds.
Background Note: The key executives at NewAlpha are:
* Nicolas Gomart, CEO, Incubation Committee. Gomart has 17 years of experience, previously Director Global Balanced and Multi manager funds management at Dexia Asset Management and he also pioneered alternative investment management at Dexia Asset Management, France. At NewAlpha Advisers, Gomart is responsible for analysis and selection process of potential incubated managers and for relations with seeding partners. He will be a Member of the Board of the incubated investment managers, monitoring them and their funds.
* Sandra Crowl, Marketing Director, has 13 years of experience, held several senior positions as Managing Director in capital market sales across all client groups for Bankers Trust London, and previously for Bankers Trust Paris, Sydney and Melbourne. At NewAlpha Advisers Crowl is responsible for marketing and client servicing for the incubated funds.
* Fréderic Cohen, Quantitative Analyst, 3 years of experience, quantitative analyst in shares and their derivatives at Crédit Agricole Asset Management and CPR Asset Management. At NewAlpha Advisers he is responsible for analysis of back testing and performance risk data of potential incubated funds.