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December 04, 2019  

Paloma-Backed Manager Starts Marketing

Credit-product investor John Aylward, who runs money exclusively for Paloma Partners, is moving ahead with plans to recruit other limited partners.

Aylward has set a $500 million capital-raising target. He plans to park the commitments in a yet-to-be-named hedge fund that would launch in February via his London-based Sona Asset Management.

The first $100 million would go into a founders share class with discounted fees.

Sona employs fundamental analysis to take long and short positons in liquid bonds in Europe. Its fund would trade side-by-side with a separate account that Aylward has been managing for Paloma since March 2016. Including leverage, that portfolio totaled $1.7 billion at yearend 2018.

That account formed in 2016 with a commitment of roughly $300 million. It was up 6.5% in 2018. It also was posting a year-to-date rise of 10% as of Nov. 25, versus a 5.2% gain for the HFRX Relative Value Arbitrage Index.

Aylward previously ran the European corporate-credit business at Highbridge Capital, where he started in 2012. He also has worked at Claren Road Asset Management, which has since been rebranded Compass Rose, and Deutsche Bank, where he headed a high-yield bond-trading desk.

Paloma, led by Donald Sussman, is known for engaging in seed-capital arrangements in which managers run its money exclusively before raising outside capital. The Greenwich, Conn., firm pursues a range of strategies but prefers to back quantitative and relative-value traders.

Quantitative-investment luminary David Shaw, for example, started D.E. Shaw with a commitment from Paloma. Joining the list more recently were Nebula Research, led by former Point72 Asset Management systematic specialist Michael Graves, and Aquatic Capital, headed by former Citadel quantitative-investment chief Jonathan Graham.