Sparx, Cosmo and PMA to unite for pan-Asia hedge fund

Dec 19, 2010

The three wings of the group plan to integrate their businesses more closely as a prelude to a new combo-product.

Cosmo Investment Management and PMA Capital Management are the respective Korean and Hong Kong alternative investment units of Tokyo-based Sparx. Together they plan to launch a new pan-Asian hedge fund product in 2011 which leverages all the skills of the group.

The strategy of the new product is not yet decided, but the target size of the fund will be $300 million. Depending on the level of external demand, Sparx may seed it themselves.

Sparx acquired the Cosmo business in 2005 and subsequently bought PMA in 2006. They now plan to integrate the three firms more closely.

“Previous management of Cosmo and PMA has been kept in place and those businesses have been run independently, with some cross-selling and joint products, but not very much,” says Sparx president Masaki Taniguchi.

The first step will be to integrate their back offices and research functions, but any changes to rationalise the separate brands is not being taken, although is still a possibility sometime in the future.

Between the three of them they manage $2.5 billion in hedge fund assets. That is $1 billion each for Sparx and PMA, with $500 million for Cosmo. Including long-only products, the group as a whole manages $6 billion.

“There are mixed feelings among investors about Japan,” says Taniguchi. “Companies are showing record high earnings, but valuations are still low.

"To some extent the strong yen is putting off international investors. There may be less growth opportunities in Japan and greater opportunities elsewhere. We happen to think that Japanese companies with a presence in China are well positioned.”