GO
Loading...

UPDATE 2-Ex-Perry exec scores Asia's biggest hedge fund launch for 2013

Nishant Kumar
Monday, 9 Dec 2013 | 2:16 AM ET

* Founder Ercil was formerly Asia head of Perry Capital

* Raises $1.1 bln, follows $940 mln debut fund

* Opportunities for Asia distressed asset investment growing

(Recasts on outlook for distressed asset investing)

HONG KONG, Dec 9 (Reuters) - Asia Research & Capital Management has raised $1.1 billion for its new hedge fund, the region's biggest launch this year, as investment opportunities for the distressed asset specialist grow on the back of tighter credit.

ARCM, founded by Alp Ercil, the former Asia head of New York-based Perry Capital, has become one of the largest hedge fund companies in the region. Its debut fund raised $940 million and was the biggest launch in the region for 2012.

The Hong Kong-based firm has fully invested Fund I assets, a source with direct knowledge of the matter said, adding that the full $1.1 billion for Fund II came from the same set of investors the firm had in the first fund.

Bill Wong, the hedge fund's chief operating officer, declined to comment. The source declined to be identified as the information was private.

ARCM's new fund launch comes at a time when investors in Asia are preparing for a slowdown, led by China's downshifting of its economy and the popping of various credit bubbles across the region as the prospect of the Federal Reserve tapering its stimulus nears.

"The market hasn't really discounted the impact of rising interest rates. So as an opportunity, distressed debt could be interesting next year," said Shinya Deguchi, an analyst at Hong Kong-based family office Star Magnolia Capital.

Distressed investing is a high risk, high reward game but in Asia, risks and rewards can be greater as price swings tend to be more volatile than other parts of the world. The 1998 Asia financial crisis and the post 2000 Internet bust proved to be fertile ground for distressed investing in the region.

INDUSTRY TURNAROUND

ARCM's capital-raising success also underscores how pension funds and endowments tend to prefer investing with bigger firms.

It takes net flows into Asian hedge funds to more than $10 billion this year, signalling a turnaround for the industry that had seen net outflows worth more than $4 billion last year, data from Eurekahedge showed.

With more than $2 billion under management, ARCM becomes one of less than 30 hedge fund firms in Asia of that size, Eurekahedge said.

Unlike Fund I, which was a three-year fund with a provision for a one-year extension, ARCM's Fund II is a five-year fund, making it more like a private equity fund.

Both funds get to charge performance fees only when investment gains are realised, making their fee structure unique in the hedge fund world, but which aligns the fund manager's interests with those of investors.

Ercil launched his investment firm last year after Perry Capital decided to shut its operations in the region in October 2011 to focus on the U.S. and European markets. Ercil worked at Perry Capital for more than 10 years.

(Additional reporting by Michael Flaherty and Stephen Aldred; Editing by Edwina Gibbs)