Proprietary funds give hedge fund guru Nicolas Berggruen an edge

Proprietary funds give hedge fund guru Nicolas Berggruen an edge
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First Published: Wed, Sep 05 2007. 12 10 AM IST
Updated: Wed, Sep 05 2007. 12 10 AM IST
Mumbai: Hedge fund guru and world-renowned art collector Nicolas Berggruen sits at the helm of a more than $1 billion (Rs4,100 crore) fund, which has put a minimum of $300 million in India.
The difference between his fund and the hundreds of other funds flooding India is that he has no investors to solicit or answer to. Berggruen Holdings Inc. invests Berggruen’s own money, which he has grown over decades from an initial pool of family money that he describes as “modest”.
The proprietary funds give him an advantage, says the Paris-born German who resides part of the year in New York and the rest in various other cities across the world.
Berggruen can nimbly make investments across all asset classes, including private equity deals, seed funding, real estate development, fund-of-funds, public market securities, hedge funds, and industrial project investments. He can infuse more funds as needed and stay invested without artificial exit requirements set by investors who need their money back.
And the economic ups and downs that impact investors of funds, such as the subprime crisis that has hit the US with an international ripple effect, will not be a problem for him. In fact, it could well be an advantage for him in India. Berggruen says, “Less liquidity means less competition.”
Although India is not a top market for the fund, which has offices across the US, Europe and Asia, with heavy investment in the former two, Berggruen has high hopes to be a part of growing India.
His September 2006 investment of $300 million in India, which came through the Cayman Islands and Mauritius route, has focused on areas such as real estate, hospitality, education, car and equipment rental, warehouse and storage, and information technology (IT).
Four investments have already been made in the first year, led by Berggruen’s India lead Kabir Kewalramani that fit the fund’s typical mouldof $20-100 million pertransaction.
They have allotted $100 million into a mid-market hotel company, Berggruen Hotels Pvt. Ltd, which runs under the brand name Keys, led by hospitality entrepreneurs, $12 million into Berggruen Education Pvt. Ltd (through hospitality education institute United Educational Institutes Global) and undisclosed sums into Berggruen Car Rentals Pvt. Ltd, and equipment rental business Gemini Equipment and Rentals Pvt. Ltd.
The branding is indicative of Berggruen’s investment style. He says he likes to retain as much control as possible in order to ensure consistency in quality down to aesthetics.
Approximately $50-100 million have been invested in the past year and the remainder will be spread over the next two years. The company is looking to invest more, and Berggruen insists there is no set limit. Globally the fund made seven private equity investments, across Portugal, Zurich, the US, the UK, and other parts of Europe across sectors, including eyeglass wear, global supply chain, and media.
Berggruen’s investments in India will have a strong focus on real estate, across commercial, residential, information technology parks and hotels. He already has invested in a 125-acre IT park in Mohali, Punjab last year. Real estate has been a focus for the fund, including in Germany, Turkey and Israel.
Berggruen brings experience in real estate to his fund, but many of his days, particularly between 1988 and 2004, were spent investing in hedge funds.
In June, Freedom Acquisition Holdings Inc., which is sponsored by Berggruen Holdings, acquired $21 billion UK hedge fund GLG Partners LP, which plans to list on the New York Stock Exchange and is an active investor in India.
GLG Partners owns a minority stake in Pune-based Idea Cellular Ltd.
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First Published: Wed, Sep 05 2007. 12 10 AM IST