The biggest new hedge funds are raising more money, at levels not seen since before the pandemic, and the 2024 crop could include one of the largest startups in years.
At least four new firms are poised to eclipse $1 billion by year-end, collectively bringing in at least $6.5 billion from investors, according to people with knowledge of the fundraising activities.
Next year is shaping up to be even bigger.
Former Millennium Management executive Bobby Jain is considering opening a multi-manager, multi-strategy fund in the second half of 2024. If he makes the leap, the launch could rival that of ExodusPoint Capital Management, which debuted in 2018 with $8 billion and is led by another Millennium alumnus, Michael Gelband.
Jain, 52, declined to comment through a spokesman.
“We are seeing some green shoots now in the marketplace that gives us encouragement,” said Barsam Lakani, head of prime services sales at Jefferies Financial Group Inc.
Even so, the number of firms beginning with at least $1 billion now is smaller compared with the years preceding the 2008 financial crisis, as fundraising is more difficult, Lakani said.
“It’s a different environment,” he said. “Launches today need to embrace outsourcing and separately managed accounts, be work-from-home flexible, lower their fees and consider starting with a leaner team.”
In 2005, a dozen startups raised at least $1 billion each, attracting about $19 billion combined. Last year, just two firms surpassed the threshold, collectively pulling in $4.5 billion.
The biggest so far in 2023 has been Mala Gaonkar’s SurgoCap Partners, which started in January with $1.8 billion.
Two of this year’s largest offerings are headed by alumni of Ken Griffin’s Citadel, and will allocate money across multiple stock managers that are roughly balanced between long and short wagers.
Jonas Diedrich and Dave Sutton are set to start trading $1.7 billion at their London-based Ilex Capital Partners in July. Todd Barker, the former head of Citadel’s Surveyor Capital unit, is poised to open Freestone Grove Partners late this year and is expected to surpass $2 billion, people said.
Colter Van Domelen’s Informatic Capital is this year’s fourth—largest launch. The former Tiger Global Management trader opened this month and expects to have $1 billion under management by year-end, according to people familiar with the firm.
Jain’s plans should become clearer after June 30, when he officially leaves Millennium. Under an agreement with his former employer, he can’t start hiring personnel or even get office space until July, and then he has to wait an additional year before he can start managing client money.
This article was provided by Bloomberg News.