11/04/2009

Weston, Harcourt Tee Up Incubation Fund

Hedge fund backer Weston Capital has teamed up with Swiss fund-of-funds operator Harcourt Investment Consulting to launch an incubation vehicle.

Weston, a $1.2 billion firm run by Albert Hallac, signed a joint-venture agreement with Harcourt last week, with the goal of launching Weston Capital Partners Fund 3 by yearend. Weston already has raised $10 million from investors in its two other incubation vehicles: Weston Atlas Partners Fund and Weston Capital Partners Fund 2. The Westport, Conn., firm eventually hopes to raise $250 million for the new fund.

Weston will take the lead in managing the vehicle, but the Harcourt name will appear on offering memoranda and marketing materials due to go out between Nov. 15 and Dec. 1. The Zurich outfit will have a seat on the fund's investment committee, and Harcourt's investment and risk-management teams will vet managers invited to join the seeding platform.

Harcourt, which is owned by Swiss private bank Vontobel Group, has some prior experience in the hedge fund-incubation business. The $3.9 billion firm spoke with several incubation specialists in the U.S. before reaching a deal with Weston.

Harcourt was attracted by Weston's marketing team and the way the firm has structured past deals. On the performance front, Weston stumbled last year, when Atlas Partners dropped 34.8%. The fund recouped two-thirds of that loss during the first nine months of this year, rising 35.8%.

Weston Capital Partners Fund 2 has fared better. It gained 10.7% in 2008, and was up 9.1% through September of this year.

Weston peaked in June 2008 with about $2.8 billion under management. In the following months, the firm was hit by some large redemptions, and one of the hedge funds its seeded closed earlier this year.

Hallac founded Weston in 1993 after managing hedge funds for himself since the late 1960s.

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