May 12, 2014
By Tomoko Yamazaki and Bei Hu
Temasek Holdings Pte, the Singapore state-owned investment company, will start a venture with Dymon Asia Capital (Singapore) Pte to back new hedge fund managers and strategies as it becomes a minority stakeholder in the firm.
Temasek committed $500 million initially that will be managed by Dymon, a hedge-fund manager based in the island-state, according to Dymon President Jay Luo. Luo and Dymon Managing Director Ben Freischmidt will be leading the new venture for Dymon, according to an e-mailed statement.
The partnership will allow Temasek to diversify its investment and returns through a local company, and enable Dymon, one of Asia’s largest hedge funds, to add to its traditional business of running macro funds by providing non-investment services to help managers start their own pools.
“Temasek is as long-term and stable as it gets, and Dymon is a Singapore success story in the hedge-fund world,” said Will Tan, a managing director at Singapore-based recruitment company Principle Partners Pte, whose clients include hedge funds. “The strategic investment into Dymon bodes well for both parties as Temasek gets to diversify its investments using the Dymon platform and Dymon gets the backing of an established” state investment company.
The partnership comes at a time when investors prefer large, established companies, starving small, new hedge funds of capital. The number of new hedge funds started sank to a three-year low last year and liquidations surged to the highest since 2009, according to Chicago-based Hedge Fund Research Inc.
“We are very excited to establish this relationship with Temasek,” Luo said in the statement. “We share a long-term vision of working with the best managers and believe our proposition to managers and investors is unique.”
The Temasek-Dymon venture’s first investment will be in a global equity long-short hedge fund focused on the Asia-Pacific region and led by Carl Vine, a former SAC Capital Advisors LP manager, according to Luo. Vine, based in Oxford, the U.K., plans to start the Port Meadow Fund with an initial fundraising limit of $500 million in the third quarter.
“Dymon has shown in the last six years that they know the alternative business and have grown into one of Asia’s largest hedge funds,” Tan said.
Dymon’s macro fund in 2011 had a more than 20 percent return, the most in Asia among hedge funds with assets of more than $1 billion, according to data compiled by Bloomberg.
In 2012, it hired Luo, a former Asia head of Steven A. Cohen’s SAC, as president and a partner. Freischmidt, the chief operating officer of the new platform business, was a founding member of GLG Partners LP’s Asia long-short equity business, according to the statement.
Dymon last year raised S$203 million ($162 million) for the first close of a private-equity fund to invest in small- and medium-sized companies in Singapore and Southeast Asia, Keith Tan, Dymon managing partner, said then. Heliconia, a Temasek unit, invested in the fund, Jeffrey Fang, a spokesman at the state investment company, told Bloomberg News at the time.
Temasek has in recent years made other alternative investments such as those in hedge funds, private equity and real estate through or with local companies.
The state investment firm in August 2009 set up a wholly owned company called Seatown Holdings Pte with committed capital of more than S$4 billion to invest in assets including stocks and bonds globally.
In January 2012, it announced the establishment of Pavilion Capital Pte, a wholly owned company run by former Temasek Chief Investment Officer Tow Heng Tan, to invest in privately held businesses in North Asia including China.
Seatown and RRJ Capital Ltd. earlier this year invested $250 million in a Chinese logistics warehouse developer, Shanghai Yupei Group Co., according to an April statement by the Chinese company. RRJ was founded by Charles Ong, once Temasek’s CIO and Seatown chief executive officer, and his brother, Richard Ong, who had been a Goldman Sachs Group Inc. partner.
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