Bloomberg News

Ex-Goldman Sachs Sze Said to Boost Fund to $1.9 Billion

July 08, 2011

(Adds hedge fund distributor’s comment in fourth paragraph.)

July 8 (Bloomberg) -- Azentus Capital Management Ltd., a Hong Kong-based hedge fund led by former Goldman Sachs Group Inc. proprietary trader Morgan Sze, increased assets to more than $1.9 billion, said three people with knowledge of the matter.

Azentus plans to stop accepting new money when the fund hits $2 billion, said two of the people, who declined to be identified because the information is private. It has “soft- closed” the fund since its inception on April 1, taking additional money only from existing and potential investors it has been in talks with for some time, they said.

Azentus is benefiting from investor interest in large funds staffed by teams with experienced traders as the European sovereign debt crisis took a toll on industry performance. Eurekahedge Hedge Fund Index slid more than 2 percent in May and June combined, headed for the worst two-month performance in a year, according to preliminary data from the Singapore-based data provider.

“There is a lot of global institutional money that wants to get invested in Asia but there are relatively few billion dollar plus funds,” said Paul Smith, chief executive officer of Hong Kong-based asset manager and hedge fund distributor Triple A Partners Ltd. “The Azentus launch provides an ideal asset allocation opportunity for this type of investors.”

Targeting Biggest Funds

U.S. and Europe-based institutions have driven recent money flows into the global hedge fund industry, he said. They are looking to allocate large sums of money and are targeting the biggest managers because they are restricted from investing too large a portion of any single fund out of risk concerns.

Azentus’s performance since fund inception on April 1 has been “flattish,” with June’s number yet to be officially announced, the three people said. The Eurekahedge gauge was down 1 percent in the same time period.

“Getting $2 billion invested in a rising market in Asia would be very hard work,” said Smith. “Getting it invested in sideways to down markets is very tough indeed. It will take a while for Azentus to gain performance traction.”

Sze, who is traveling, didn’t immediately reply to an e- mail seeking comment.

The 45-year-old was a former global head of Goldman Sachs’s principal strategies proprietary trading desk, also known as GSPS, people with knowledge of the matter said in March. The bank’s largest internal hedge fund at its peak oversaw $3 billion of investments in Asia, they added.

Leaving Banks

Sze was among proprietary traders who have left financial services companies to start their own hedge funds as the U.S. introduced the Dodd-Frank Act that restricts banks from making bets with their own money in the wake of the worst financial crisis since the 1930s.

Pierre-Henri Flamand, with whom Sze was once jointly responsible for the GSPS team, left in March 2010 to start his own hedge fund Edoma Partners LLP.

Ariel Roskis and Daniele Benatoff, former traders for GSPS in London, have teamed up with Brummer & Partners to start Benros Event Driven & Opportunistic Fund, which invests mainly in European equities, debt and derivatives, Brummer & Partners said on May 31.

London-based Benros Capital Partners, which manages the fund, got an initial allocation of SEK2 billion ($316 million) from Brummer & Partners, the largest Scandinavian hedge fund, the Stockholm-based firm said.

Azentus, a global hedge fund focused on Asia, employs strategies including event-driven, capital structure and convertible bond arbitrage, distressed assets, volatility trading, private securities and equity long-short, the people said in March.

It raised $1.06 billion when it started trading on April 1, the most by an Asia-based hedge fund startup since at least 2007, three people with knowledge of the matter said in May.

--Editors: Linus Chua, Tomoko Yamazaki

To contact the reporter on this story: Bei Hu in Hong Kong at bhu5@bloomberg.net Netty Ismail in Singapore nismail3@bloomberg.net

To contact the editor responsible for this story: Linus Chua at lchua@bloomberg.net


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