New York: Ajay Kapur, Citigroup Inc.’s New York-based chief global equity strategist, is returning to Hong Kong to set up a hedge fund called First Horse Capital. Niall MacLeod and two other members of Kapur’s team left Citigroup, the world’s largest financial firm by market value, and will join First Horse. Robert Buckland will replace Kapur, who became chief equity strategist in 2004 and correctly predicted US stocks would rise last year.
“I just thought that one should eat one’s own cooking,” said Kapur, 42, a holder of residency rights in Hong Kong. The results of investment models that Kapur and his team devised were “pretty good,” he said from London.
Other Wall Street advisers have also joined Asia-based hedge and buyout funds, where performances have outpaced Europe and North America. JP Morgan Chase & Co.’s co-head of China investment banking, Meng Liang, quit to join DE Shaw Group, people familiar with the situation said on Wednesday. Asian hedge funds returned 16.1% last year, exceeding the 11.5% gains of their counterparts in North America and 11.35% in Europe, according to indexes run by Eurekahedge, a Singapore-based company that tracks the industry.
Chris Hsu, formerly a fund manager at Citadel Investment Group Ltd, will lead Asia’s first start-up independent hedge fund to begin with more than $1 billion, the Financial Times said on Thursday, citing people familiar with the situation. Hsu will be joined by Donald Yang, who was head of Asian debt capital markets at Merrill Lynch & Co and Frank Qian, who had also worked at Citadel, FT said.
Wall Street firms have also been leeching staffers to buyout firms in the region. Private equity and buyout transactions increased almost eightfold last year to $122 billion, according to data compiled by Bloomberg.
In January, JP Morgan’s Asia Pacific Chairman Ralph Parks joined Oaktree Capital Management LLC, a Los Angeles buyout firm with more than $33 billion of assets. Darby Overseas Investments Ltd, the private equity arm of Franklin Resources Inc., said last month it had hired Sean Wallace, former JP Morgan head of capital markets for Asia-Pacific, as a senior managing director. Huan Guocang, HSBC Holdings Plc.’s former head of China investment banking, joined Primus Pacific Partners in July 2005. Goldman Sachs Group Inc. lost Rajiv Ghatalia, former co-head of investment banking in Asia outside Japan, who left for Warburg Pincus LLC in May 2005.
First Horse Capital, named after the Indian cavalry regiment Kapur’s father served in, will invest in stocks worldwide. Kapur declined to say how much money he’s raised for First Horse Capital.
The fund is based in Hong Kong because to get information from China, India, Japan, “you need to be closer and on the ground”, he said.
Prior to his promotion to global head of strategy, Kapur was head of Citigroup’s global markets division in Asia. In 2002, he joined Salomon Smith Barney, which was subsequently taken over by Citigroup, from Morgan Stanley. In an interview on 4 October 2005, Kapur said there was a 100% chance U.S. stocks would rally in the ensuing six to 12 months. “Information on the US and Europe is pretty freely available. In fact, there’s too much of it. You just need to parse it properly.” (Bloomberg)
(Christine Harper contributed to this story.)