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April 06, 2016  

Website Enables Co-Investment on Small Scale

A financial-technology startup is offering investors direct access to distressed debt, liquidations and other complex deals for minimum investments of just $20,000.

RueOne Investments, the brainchild of Jeff Baehr, functions as a kind of electronic marketplace for accredited investors seeking hedge fund or private equity opportunities — but who lack the resources to meet minimum-investment requirements that can range up to $10 million or more. Through RueOne’s website, clients can research and deploy capital to individual deals held by hedge fund or private equity firms. In effect, RueOne is offering smaller investors a chance to co-invest alongside big alternative-asset managers.

RueOne has negotiated arrangements with hedge fund firms and private equity shops that have excess capacity for specific deals. In exchange for the capital RueOne raises, the fund managers will share portions of their fee revenues. RueOne also will collect fees from its clients.

For now, the service is available by invitation only. A public release is expected before the end of the second quarter.

Baehr is pitching RueOne as an opportunity for clients to participate in alternative investments on an “a la carte” basis, while still benefiting from the expertise of hedge fund and private equity managers. The website offers access to an array of deals including investments tied to leveraged buyouts, venture capital, structured products, direct lending, convertible bonds, litigation financing and real estate.

RueOne plays the role of investment advisor, with primary responsibility for client funds. The underlying managers serve as subadvisors to the RueOne accounts. Baehr is telling prospective clients that his service offers far more transparency than a commingled fund.

While the technology is ready to go, RueOne is holding off on a full roll-out until it can build up its staff. Baehr is looking to hire a chief investment officer, business-development professional and two marketers.

RueOne’s business model is a product of the JOBS Act, a 2012 law that loosened restrictions on marketing private investments. Previously, it would have been illegal to use a website to raise money for anything but publicly registered securities.

Baehr, who has performed a variety of roles in the hedge fund industry, previously founded Empiric Asset Management, which invested in energy-infrastructure plays. His former director of research at Empiric, Dave Nanidzhanyan, has joined him at RueOne.

Baehr earlier worked at fund-of-funds manager Aris Capital, Carlyle Group, Deutsche Bank and the World Bank. His father, Milton Baehr, founded the hedge fund-data service PerTrac, which was acquired by eVestment in 2012.