Search Results

June 06, 2018  

Falcon Edge's Gerson Directs Seeding Effort

Falcon Edge Capital founder Richard Gerson, linked in recent news reports to meetings between Abu Dhabi officials and associates of President Trump, is starting a hedge fund-seeding business with the backing of Abu Dhabi.

Gerson, who began his career as an intern at Tiger Management, has told industry professionals he is searching for worthy hedge fund startups for seed deals of perhaps $100 million apiece. An Abu Dhabi sovereign wealth fund, Mubadala Investment, is prepared to invest $1 billion in the program. A Mubadala spokesman described the effort as being in “the very early stage.”

A key condition of any seed deal is that the manager would have to open an office in Abu Dhabi, which is making a concerted effort to build up its financial-services sector.

It’s unclear whether Gerson is working on the seeding business via Falcon Edge or some other entity. Regardless, under his deal with Mubadala, Gerson would split fee revenue generated by the seeded managers, a source said.

Gerson appears to have won the assignment through his long-standing relationship with Crown Prince Mohammed bin Zayed Al-Nahyan, the ruler of Abu Dhabi and chairman of the sovereign wealth fund. The crown prince is believed to have been an early backer of Falcon Edge, a New York hedge fund firm that launched in 2012 with $1.2 billion.

Recent news reports connecting Gerson and the crown prince with Trump associates including Jared Kushner, Steve Bannon and Michael Flynn could complicate efforts to get the seeding business off the ground. NBC News reported on June 1 that Gerson, a close friend of Kushner, was in the Seychelles in January 2017, around the same time that Trump associate Erik Prince met with Prince Mohammed as well as a Russian official. NBC also said Gerson has come under scrutiny by special counsel Robert Mueller, who is investigating possible efforts by foreign agents to influence the Trump campaign or White House. A Gerson spokesman told NBC that he did not attend the Seychelles meeting and isn’t a target of Mueller’s probe.

In any case, Gerson is an unusual choice to run a hedge fund-seeding business, since he appears to have little, if any, experience in that field. Falcon Edge is known for taking concentrated positions in public and private companies, both through its Falcon Edge Global Master Fund and a number of private equity vehicles. After a strong start, followed by several years of poor performance, the firm’s assets slipped from a peak of about $2.9 billion in 2016 to about $1.3 billion today.

After his internship at Tiger, Gerson followed “Tiger cub” John Griffin to help launch Blue Ridge Capital in 1996. Gerson remained on board at Blue Ridge until leaving to start Falcon Edge.

In March, Abu Dhabi said Mubadala would absorb another sovereign wealth fund, Abu Dhabi Investment Council, forming an investment operation that now oversees some $200 billion. Abu Dhabi also owns the $800 billion Abu Dhabi Investment Authority, one of the world’s largest hedge fund investors.