08/15/2012

Blackstone Enticed by UK Investment Talent

Blackstone has seeded another U.K. hedge fund operation, investing $100 million in startup Naya Capital.

The private equity giant deployed capital from its $2.4 billion Blackstone Strategic Alliance Fund 2, the largest hedge fund-seeding vehicle ever assembled. The fund, which began investing in late 2010, initially focused on U.S. managers, but more recently has turned its attention to Europe. It has backed two other U.K. fund shops in the past year or so: Carrhae Capital and Denjoy Capital.

Naya, led by former Children’s Investment Fund executive Masroor Siddiqui and Citadel alumnus Bruce Emery, launched its Naya Fund last month with $150 million — including Blackstone’s seed investment.

Blackstone plans to inject another $50 million in the next few months if Naya meets undisclosed milestones. In exchange for its backing, Blackstone takes a cut of the manager’s fee revenue.

Emery and Siddiqui started their London firm early this year. Naya Fund is a long/short equity vehicle that also makes opportunistic debt investments. Emery previously spent nine years working as a portfolio manager in Citadel’s London office. Siddiqui had been a senior partner at London-based Children’s Investment Fund.

The Blackstone vehicle has now deployed about half of its capital. Among the fund’s earliest investments were seed deals with former Kingdon Capital technology-stock trader John Wu and one-time Credit Suisse commodity trader George Taylor.

Denjoy’s long/short equity fund, which launched in May 2011 with $100 million from Blackstone, quickly shot up to $874 million at yearend. The firm is led by Frederic Denjoy, a former partner at Brevan Howard Asset Management.

Carrhae, meanwhile, has grown to about $500 million since being seeded with $100 million of Blackstone money in December 2011. The firm, which focuses on emerging-market investments, is led by former SAC Capital trader Ali Akay.

Blackstone’s first hedge-fund seeding vehicle, Blackstone Strategic Alliance Fund 1, began investing in 2007 and ultimately deployed $1.1 billion. Both funds have the flexibility to maintain their positions indefinitely — meaning in the long run, they’d effectively operate as funds of hedge funds.

Back Print