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November 06, 2019  

New Program Aims to Back Illiquid Strategies

A consulting firm that advises institutional investors on allocations to emerging managers and niche strategies is starting an asset-management business.

Decagon Advisors, led by former Deutsche Bank absolute-return fund marketer Vera Joffe Shapiro, is in the early stages of developing a platform that would deploy anchor capital to startups offering illiquid strategies through drawdown vehicles.

To run the new business, tentatively called Mentor-Anchor Program, Decagon has reunited with co-founder Sheryl Mejia, who spent the previous three years in charge of New York Common Fund’s emerging-manager portfolio. Mejia started in the new position this week.

Decagon has a pipeline of dozens of manager prospects specializing in illiquid investments including activism, direct lending, distressed-debt and private equity. And it already has held discussions with a number of large investors about supplying an initial chunk of capital.

The goal is to back perhaps eight launches in the next 4-5 years, deploying some $50 million per fund.

Decagon, a New York firm founded in 2009, works with investors on due-diligence reviews of fund managers, while also advising hedge fund startups on operational issues and marketing strategies.

Decagon’s initiative comes as an increasing number of hedge fund professionals are pivoting to niche strategies and illiquid investments. Among the most recent examples is Titan Advisors co-founder Tom Holliday. He has started a firm called Holliday Investment that seeks to form partnerships with hedge fund managers for the purpose of developing and marketing strategies that are largely uncorrelated with financial markets.

And Bain Capital recently pooled $197 million of partner capital to seed managers running niche strategies. Bain also wants to raise at least $100 million from outside investors.

At New York Common, Mejia managed a portfolio encompassing some $7 billion of commitments to 120 emerging managers across multiple asset classes. Prior to co-founding Decagon, she worked at KCS Funds, Deutsche and KPMG.