In what is possibly the first sign of reaction to the Dodd-Franks Bill, Goldman Sachs’ Asia-based Principal Strategies traders, a 10-man plus team managed by Global Head Principal Strategies Morgan Sze, are gearing up to leave the firm at the end of the year to start their own hedge fund. To add extra gravitas ex-CEO of Boyer Allen, Roger Denby-Jones, has been appointed as the fund’s COO, and even though he will help set up the company, he won’t, as pointed out in Bloomberg News, be a Goldman’s employee. The fund will be based in Hong Kong. Denby-Jones himself is an ex-Goldman Sachs prime broker, where, during his 14 years, he led prime brokerage sales in Europe before joining Boyer Allen in 2005.
It is believed that having him on board will help Sze’s new fund raise additional capital and ease investors concerns that proprietary traders cannot properly manage risk or deal with the operational aspects of running a fund, given that they could previously rely on the bank’s own internal teams to deal with these issues. Speaking to Bloomberg News, Paul Smith (pictured), a Managing Director of Hong Kong-based hedge fund distribution firm, Triple A Partners, said: “The key question for a proprietary desk spinoff to answer is not one about their talent, but one about their business- management ability as their careers have been cocooned with an investment bank.” Ex-Goldman Sachs employees have had a good track record launching hedge funds this year. One of the most talked about in Asia is Davide Erro’s USD300 million Turiya Fund, launched this April, whilst Pierre-Henri Flamand’s London-based Edoma Capital Partners LLP is expected to raise USD500 million over the coming months.