SkyBridge Capital will consolidate its 15 funds that provide seed capital to startup and early-stage hedge fund companies into a single fund and will seek to list that fund on a New York exchange by the end of the year as part of “re-engineering the business,” said Anthony Scaramucci, managing partner.
The move is being made in response to a tough environment for young hedge fund companies, Mr. Scaramucci said. “The hedge fund seeding business is in a nuclear winter right now, with negative macroeconomic factors such as investor fear, market uncertainty, the economic recession and the prospect of finding more hedge fund rogues and criminals, making it difficult for new hedge fund managers to make it. Many of last year's so-called hedge fund 'green shoots' are getting stomped on by volatile markets and these macro factors.”
Mr. Scaramucci said the daily liquidity of a listed hedge fund seeding vehicle will be a big advantage to investors and will help SkyBridge by providing permanent capital. The current client base of Skybridge's hedge fund incubation business is predominantly high-net-worth investors, but does include institutional investors such as the $203 billion sovereign wealth fund Kuwait Investment Office, Kuwait City.
SkyBridge Capital's seeding funds totaled about $870 million on July 1, including a seeding fund that came with SkyBridge Capital's acquisition of the hedge fund management unit of Citi Alternative Investments in June. At the time of the acquisition, CAI managed a total of $4.2 billion in hedge funds of funds, hedge fund seeding strategies and pension hedge fund advisory business, about $2.5 billion of which is from institutional investors.