Goldman Sachs Group plans to provide $150 million to $200 million for a hedge fund being started by Todd Edgar, a former commodities trader at Barclays, said two people with knowledge of the preparations.
Goldman Sachs will make an investment through a so-called seeding fund it started this year with money raised from pension funds and wealthy individuals, the person said.
In return, Mr. Edgar will give Goldman Sachs a cut of the fees his hedge fund generates, said the people who declined to be identified because the negotiations are private.
Congress last year restricted banks’ investments in hedge funds through the so-called Volcker rule after lawmakers concluded that financial institutions shouldn’t be using federally backed deposits for wagers on markets. The Goldman Sachs seeding fund is permitted under the law because it uses client money rather than the firm’s capital.
Mr. Edgar and his team of commodities traders left Barclays in the third quarter. His fund will trade futures and options on metals based on the firm’s views of global economic trends, the people said. The fund plans to start trading next year, the people said.
Joanna Carss, a spokeswoman for Goldman Sachs in London, and Mr. Edgar declined to comment.