Ascalon planting seed capital into Asian hedge funds

Ascalon Capital Managers, the Australian alternatives fund incubator, has been branching out into Asia, where it is investing in funds and also raising capital for its stable of strategies Down Under.

Since establishing an on-the-ground presence in Hong Kong in mid-2011, it has invested in two hedge funds in the region. Earlier this month it took a 30% stake in Singapore-based Canning Park Capital, which runs a long-short equity fund. And, in December, it acquired 35% of fledgling hedge fund manager Athos Capital, which plans to launch an event-driven strategy to be managed out of Hong Kong by former Tiresias team members Matthew Moskey and Erik Senko.

Ascalon’s aim is to expand its business scope beyond Australia, where it has invested in seven domestic boutique fund managers with about $4.5 billion in combined assets under management.

“We’ve done well over the past few years in Australia and felt that we could expand the business strategy by diversifying into Asia,” says Jason Collins, Ascalon head of business development. “We believe there are good-quality alternative fund managers in Asia that we can partner.”

Ascalon is in the process of setting up a Hong Kong office, pending regulatory approval by the city’s Securities and Futures Commission (SFC). The operation is intended to be the holding company for its investments in the region and is to be headed by Chuak Chan, previously the chief operating officer at Asian multi-strategy hedge fund Segantii Capital Management in Hong Kong. He is also awaiting an SFC licence.

Collins declined to say whether Ascalon had plans to establish an Asian seeding fund for its investments in the region. “Our activity [at the moment] is limited to forming new partnerships in Asia.”

While the financial details of the firm’s investments in Canning Park and Athos have not been disclosed, Ascalon is understood to be targeting funds that are between $100 million to $500 million in size.

Canning Park’s CPC Asia Opportunities Fund, which has about $116.3 million in AUM, returned 3.3% in 2011 – a year in which Asian hedge funds had an average return of -12.85%, according to data provider Eurekahedge – and 12.6% since its inception in September 2010.

Meanwhile, Athos is in the starting stage and is awaiting SFC licence approval before launching an Asian event-driven fund. Aside from Moskey and Senko, who were the respective portfolio manager and head of trading for Tiresias’ event-driven Omni Asia Fund, the Athos team also includes Fred Schulte-Hillen, previously chief operating officer of hedge fund Black’s Link Capital.