Former Millennium Management Asia executive Jonathan Xiong’s new hedge fund pod shop has signed up C$632.3 billion ($459.3 billion) Canada Pension Plan Investment Board, Toronto, and a unit of Singapore’s S$382 billion ($282.5 billion) Temasek Holdings as additional backers, according to people familiar with the matter.
Canada’s largest pension plan and Seviora Capital, a wholly owned unit of the Singapore state-owned investor, will join Blackstone as anchor investors for the Arrowpoint Investment Partners fund, said the people, who requested not to be named because the matter is private.
Arrowpoint aims to start trading July 1 and deploy more than $1 billion within two months, said one of the people. That makes it one of the largest Asia hedge fund startups in history based on assets amassed at inception. Representatives from Arrowpoint, CPPIB and Temasek’s Seviora declined to comment.
Hedge fund pod shops have been gaining popularity in recent years while the rest of the global industry stagnated. Combined assets of 55 of these firms globally nearly tripled in the six years through 2023, according to a September report by Goldman Sachs Group’s prime brokerage team. Investors have been looking for one-stop shops to gain access to a variety of investment strategies in an increasingly volatile market environment.
Asia-based pod shops
More of them are spreading their wings in Asia. Still, the regional market is dominated by large global players such as Millennium, Point72 Asset Management and Balyasny Asset Management, for which Asia represents a smaller market. Arrowpoint marks a rare new entrant dedicated to the region with locally based decision-makers. Xiong is a former Asia co-CEO of Millennium.
The people declined to specify the amount of capital the three anchor investors are contributing and other terms of their investments. Strategic backers are usually willing to commit money for longer periods, often in exchange for a share of the fee revenue.
CPPIB is investing in Arrowpoint through its emerging managers program, which has provided $6 billion in capital to fledgling hedge fund firms since 2016, including Hong Kong-based Ovata Capital Management.
Arrowpoint will begin trading with more than 50 employees in Singapore and Hong Kong combined. July will see about 12 of its investment teams start trading. The rest of the 18 teams the firm has signed up will join at later dates due to noncompete agreements with their prior employers, the person said.
Further expansion is already in the plans. By January, Arrowpoint will move into a new Singapore office that can seat 100 people. Apart from investment staff, the city-state will house the bulk of its technology, and middle- and back-office support employees. Most of the investment strategies Arrowpoint intends to employ will be in place by Sept. 1, the person said.
Arrowpoint is not the only new entrant to the Asia pod-shop market. Bobby Jain’s Jain Global is also slated to begin trading in July with at least $5 billion. Unlike peers such as Millennium and Point72 that expanded to Asia years after founding, Jain Global is making Asia one of its seven core businesses at inception, starting with more than 10 portfolio managers in the region, Bloomberg News reported.
Other regional hedge fund pod shops of size include Dymon Asia Capital and Polymer Capital Management, the $4.3 billion firm led by a former Asia head of Point72 and majority owned by PAG.
Pod shops allocate capital among teams of investors and typically pass on certain expenses to their clients in an arrangement known as “pass-through.” They have been locked in intensifying competition for talent and have been under pressure to produce returns to justify their higher fees as risk-free interest rates have risen.
