Gottex, Headland team up in boost for capital-starved Asian hedge funds

Swiss fund-of-hedge-funds manager Gottex is teaming up with two former executives of Blackstone and Goldman Sachs to back Asian hedge fund managers starved of capital since the global financial crisis.

Gottex is entering a partnership with Headland Strategic - founded by Michael Garrow, an ex-Blackstone executive, and Johannes Kaps, who earlier worked at Goldman Sachs. It will offer hedge fund managers as much as US$75 million each from next year.

It aims to help them individually build start-up capital of at least US$100 million.

The scale of the initial financial backing is substantial. A typical seed investment in Asia has remained at about US$25 million in recent years.

Seeders usually pocket 20 to 30 cents of every dollar earned by a hedge fund in addition to their share of the return generated. Many smaller managers and those looking to start in Asia are willing to share revenues in exchange for long-term capital.

Gottex, via its partnership with Hong Kong-based Headland, plans to start seeding funds by the first quarter of next year and back two to three managers every year.

Gottex co-founder Max Gottschalk said the company saw enormous potential in Asia, where allocations to hedge funds remained underweight.