Fund of hedge funds manager Financial Risk Management has launched a new business to provide seed capital to early-stage and start-up hedge fund managers, with its own capital and dedicated team of experienced investment professionals.
FRM Capital Advisors will look to make significant investments with promising new hedge fund managers and will provide strategic guidance to assist the managers in reaching institutional standards in areas such as governance and structuring, operations, compliance, risk management and technology.
'The institutionalisation of the hedge fund industry is creating formidable barriers to entry for new managers,' says FRM group chairman Blaine Tomlinson. 'The asset levels and infrastructure required to attract investors has steadily increased, meaning that investment talent alone no longer guarantees success.
'More managers are seeking partners to reach the critical mass necessary to build thriving businesses, so we created a platform that has the ability to invest significant amounts of capital in talented new managers and to bring new investment opportunities to our clients.'
Clive Peggram, who has been appointed chief executive of FRM Capital Advisors, says: 'There has recently been a sea-change in industry dynamics. Now, having seed capital is often seen as a mark of quality and durability by mainstream investors and is an invaluable platform for managers seeking to attract institutional investment.
'We are building a sizeable team of investment professionals to evaluate, invest in and assist new managers in building their businesses. In addition, we gain tremendous benefits from FRM's 15 years experience as a hedge fund specialist.'
The group says FRM Capital Advisors' staff of investment professionals have extensive experience in hedge fund analysis, establishment, seed deal negotiation, business development, risk management, derivatives trading and investing.
Peggram has more than 25 years of experience in asset management, hedge funds, derivatives and venture capital. After a 10-year career at AIG Financial Products, in 1999 he co-founded Comvest, a venture capital company that has provided capital and business support to early-stage companies spinning out of major universities.
Chief investment officer Neil Mason was previously chief executive of BlueCrest Capital Management, responsible for business and capacity development, trader management and risk management, having joined the business as a portfolio manager.
Chief operating officer Patric de Gentile-Williams was previously co-founder and chief executive of hedge fund platform PCE Investors, responsible for business strategy, manager assessment and selection and risk management.
Founded in 1991, FRM is a fund of hedge funds group with some USD14bn in assets under management on behalf of sophisticated and institutional investors worldwide and has more than 200 employees in offices in London, New York, Tokyo, Sydney and Guernsey.