Brevan Howard is among the latest entrants into a small but growing list of asset managers trying to monetize their in-house expertise built over decades of trading experience. Quantitative hedge fund Winton Group spun off a data unit that collects, cleans and enriches complex datasets in 2017 as a separate service, while Amundi SA announced the creation of a new business line, Amundi Technology, earlier this month.
“This is indeed a good way to scale up business and diversify revenue,” said Bloomberg Intelligence senior analyst Sarah Jane Mahmud. “At the moment, it seems to be quite a concentrated industry but is becoming more competitive.”
Coremont took Cove Capital as its first client when founder Louis Basger started the macro hedge fund firm. Basger eventually joined Brevan Howard last year. Landseer Asset Management, an equity long-short money manager recently spun out of hedge fund CQS, is also a client, while SoftBank uses the platform for its investments in equities and equity derivatives.
Rising Pressure
Others are signing up. Coremont had added eight new clients over the Covid lockdown period, taking the total number to 17. Headcount has doubled to more than 200 people and the firm is in advanced conversations with traditional asset managers, sovereign wealth funds and sell side institutions to turn them into clients, Mehmet said.
Coremont’s revenue for the year ending March 31, 2020 was 27.4 million pounds ($37.6 million), up from 23.9 million pounds a year earlier, according to a filing with the U.K.’s Companies House.
Its growth comes as Brevan Howard, now under the leadership of its chief executive Aron Landy, has started to grow assets again. The firm managed $13.7 billion at the end of February, according to an investor document seen by Bloomberg. Landy is spearheading a project to move the firm away from being a founder-led hedge fund toward a broader financial-services operation.
For its part, Coremont is busy building its infrastructure. It offers portfolio management technologies, risk management and analytics; executes and processes trades; and helps funds handle regulatory reporting and investor relations.
The firm is building out its cryptocurrency offerings in collaboration with Elwood Asset Management, an affiliate firm. It’s also working with SIG Technologies, a quant trading platform spun off from Brevan Howard, to allow clients research, back-test and automate execution.
Coremont’s success coincides with rising pressure on fees and mounting costs for the hedge fund industry. That has in turn led money managers to outsource their non-core functions to external firms.
“The industry right now, because of cost pressures, is more disposed to outsourcing than it has been at any point in my career,” Mehmet said.
—With assistance from Annie Massa.
This article was provided by Bloomberg News.