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March 28, 2018  

ExodusPoint to Launch With $2 Billion-Plus

After more than a year of speculation about his fund-raising potential, Michael Gelband is on track to launch his ExodusPoint Capital with at least $2 billion — and perhaps substantially more.

Gelband, whose resume includes top investment roles at Millennium Management and Lehman Brothers, plans to begin trading his ExodusPoint Partners Fund on June 1 with help from an unusually large investment team for a startup. Even $2 billion of day-one capital would place ExodusPoint among the biggest hedge fund launches since the global financial crisis.

Gelband has been working on ExodusPoint since leaving Millennium about a year ago. Efforts to recruit Millennium staffers led to an arbitration dispute between Gelband and Millennium founder Izzy Englander that delayed ExodusPoint’s launch.

But since settling the dispute around yearend, Gelband and his partner, former Millennium equity-trading head Hyung Soon Lee, have been on a hiring spree that so far has landed about 10 former Millennium staffers. They also recently recruited four investment professionals who worked at Hutchin Hill Capital before founder Neil Chriss converted the fund operation to a family office late last year.

ExodusPoint continues to search for trading teams who have multi-year track records running at least $100 million, with risk-adjusted returns in the high single digits or better. The plan is to assemble a small army of portfolio-management units divided between equity and fixed-income strategies. Gelband will distribute capital among those units depending on market opportunities and risks — playing essentially the same role as Englander at the $36 billion Millennium.

Once the operation is up and running, ExodusPoint also would consider allocating capital to independent fund managers, a source said. In addition to its headquarters in New York, the firm soon will open an office in London, and later plans to add an outpost in Asia.

Gelband is among several prominent fund managers who are expected to launch with north of $1 billion this year. SAC Capital founder Steve Cohen reportedly has raised at least $3 billion for SAC successor Point72 Asset Management, which had been operating as a family office before the SEC in January lifted restrictions tied to an insider-trading case. Another potential mega-launch is D1 Capital, a startup led by former Viking Global chief investment officer Daniel Sundheim.