09/25/2013

MKP Co-Founder Starts New Fund Operation

After several years out of the hedge fund business, MKP Capital co-founder Eric Keiter is staging a comeback.

Keiter, who is working with two partners, has set up a management shop called Shadow Tree Capital. The plan is for the New York firm to launch a series of closed-end funds focused on investments in non-bank financing, including consumer debt and loans to small and mid-size businesses.

The first vehicle, dubbed Shadow Tree Income Fund, would be aimed at U.S. investors. It is expected to hit the capital-raising circuit on Oct. 1 with the goal of attracting $15 million to $25 million for a final close next April or thereabouts. A second offering directed at limited partners in Europe would follow.

The funds would pursue loans with maturities of two months to two years, while holding their capital for 3-4 years. Investors would pay fees equal to 1.25% of assets and 20% of profits, subject to a 6% hurdle.

Keiter founded MKP in 1995 with Patrick McMahon and Maurice “Chip” Perkins. He left the New York firm in 2006 and, after a few years off, became an owner of a company called New York Livery Leasing that leases vehicles to car-service operators.

Another New York Livery principal, Samuel Gradess, is leaving with Keiter to become one of Shadow Tree’s two other partners. Shadow Tree’s third owner is described as currently serving as an advisor to a large bank’s hedge fund operation, which he is expected to leave soon. All three partners will work on investments and marketing, with the unnamed third individual leading the shop’s capital-raising efforts.

Perkins stepped down from MKP in 2011 — leaving McMahon in charge of the firm. The operation, which runs global-macro, structured-credit-product and relative-value fixed-income vehicles, was managing $24 billion of regulatory assets at the end of last year, according to Hedge Fund Alert’s Manager Database.

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