Thames River launches hedge fund seeding vehicle

Thames River Capital has launched a new fund of hedge funds to provide backing to promising new hedge fund start-ups.

Managed by Ken Kinsey-Quick, who has over 10 years experience in selecti

Thames River Capital has launched a new fund of hedge funds to provide backing to promising new hedge fund start-ups.

Managed by Ken Kinsey-Quick, who has over 10 years experience in selecting and investing in new hedge funds, Thames River Hedge Ventures Fund (TRHV) offers investors the potential to benefit from the ‘new manager out-performance phenomenon’ and also to participate in the strong revenues associated with successful and fast growing hedge funds.

Thames River Hedge Ventures Limited has been established in the Cayman Islands as a multi-class open-ended investment company.

TRHV expects to ‘seed’ up to five new hedge funds over the next 9-12 months alongside Thames River Capital’s other fund of fund vehicles that allocate a proportion of their assets to start ups.

TRHV and the Thames River fund of hedge funds made their first investment on 2 August, seeding a new capital structure arbitrage fund, Iyber Capital Management, with USD 25 million.

Kinsey-Quick said: “We are fortunate to be able to seed a team like Iyber who we believe have all the characteristics and potential to be one of the top hedge fund firms in London within a relatively short period of time.”

Key TRHV Features:

* Maximum 5-year life with a clear exit strategy.
* Co-seed alongside other Thames River Capital multi-manager funds.
* Seeding agreements will generally incorporate gross revenue sharing arrangements in the hedge fund management companies, exit multiples, fund fee rebates and capacity rights.
* Ken Kinsey-Quick, the portfolio manager of this new Fund, has extensive experience of investing in/seeding new hedge funds in the 10 years he has been in the hedge fund industry.
* Uncorrelated equity-like returns by participating in the profitable, high growth hedge fund industry via investment as well as business returns.

Additional Features

* Fee discounts – The Fund seeks to negotiate substantial fee discounts on its investments in the underlying hedge funds.
* Revenue participation – The Fund seeks to negotiate revenue sharing arrangements with the manager of the underlying hedge fund enabling investors to share in the manager’s success.
* Exit multiples – Unique to this product, at inception the Fund seeks to negotiate exit multiples requiring the hedge fund manager to buy out the Fund’s revenue participation within a fixed time period.
* Capacity rights – The Fund seeks to agree capacity rights at discounted fees with the underlying hedge funds.

Thames River stated: “Achieving all or part of the above benefits can have a significant impact on the performance of the Fund for the same investment risk when compared to investing in the underlying hedge funds on an arms length basis.”

In addition, Thames River expects to add value by evaluating the macro environment to determine which strategies are expected to perform well over the foreseeable future and by manager selection.

Kinsey-Quick said: “I believe that this is one of the better sources of potentially superior risk-adjusted returns as investors can take advantage of not only hedge fund investment returns but also participate in the business returns of a fast growing industry.”

Background Note: Thames River Capital was established in August 1998 and manages USD 4.6 billion with 75 staff. Thames River Capital manages approximately USD 400 million in multi-manager hedge funds. Thames River Capital manages a range of traditional long only funds, long short funds and multi manager hedge funds investing in European equities, Japanese equities, Emerging Market equities, Global Credit markets, OECD sovereign bonds and external hedge funds. Funds under management grew by 82% in 2003 and 34% YTD 2004.