Sun Hung Kai to expand alts incubation platform
Sun Hung Kai Fund Management aims to expand the number of funds hosted on its alternatives incubation and seeding platform following the acquisition of a stake in hedge fund manager Kima Capital in September.
The fund firm, a unit of the $8 billion Sun Hung Kai Financial, paid an undisclosed sum to acquire a 33% indirect stake in Kima Capital.
Founded in 2009 by former Marble Bar portfolio manager Justin Klintberg, it runs the Kima Pan Asia Offshore Fund – a long/short equity strategy. Kima additionally runs a smaller leveraged product, with total AUM across the two funds at $25 million.
“Our ambition is to build a best-of-breed Asian alternative investment business composed of different boutique [managers]," says Wilfried Gehin, head of product development at SHKFM.
In addition to Kima, SHKFM also hosts on the platform a Greater China long/short equity manager which was onboarded in 2011, and an Asian private equity fund that joined in 2007.
“We want the Asian incubation and seeding platform to [eventually] manage several billion in AUM,” Gehin tells AsianInvestor. “If we are successful, we should be able to do that with four to seven managers.”
Klintberg says he decided to partner SHKFM due to its long-standing franchise in Asia. “We had conversations with European and North American entities looking to gain a foothold into the region, but I didn’t think that they could accelerate the growth of our business,” says Klintberg. “A locally embedded Asian franchise is extremely beneficial.”
Klintberg, who serves as Kima’s chief investment officer, left Marble Bar to found Kima in Melbourne, with former Macquarie executive Michael Gallagher serving as its chief executive.
Gallagher sold his interest to SHKFM as part of the acquisition and remains based in Australia, while the three-member Kima operations team relocated this year from Melbourne to Hong Kong, where Klintberg and two other investment team members have been based since 2010.
David Nesbitt, previously with asset manager Asia Pacific Group, has been serving as Kima’s chief executive since September. He is based in Hong Kong, along with the rest of Kima's team.
SHKFM has been in talks with other Asia-focused alternative fund managers that are interested in joining its platform, says Gehin, but it has no agreement in place yet to bring a new strategy on board.
“We are very selective as to the partners we are willing to onboard,” he says, adding that having no more than one new addition to the platform per year would be optimal to ensure a smooth transition.
SHKFM has $165 million in AUM as of June 2013, with the incubation and seeding platform accounting for 40% of assets. Its other business areas include portfolio management services, run internally by staff, and providing clients with access to feeder funds into global hedge funds.
“Clients in Asia are extremely interested in absolute-return-type products,” says Gehin. “They are keen to invest into products that offer very little correlation to the broad markets. Our current distribution footprint is clearly Asia-based.”
The bulk of capital for private equity and hedge funds in Asia, however, comes from large US institutions such as fund of funds, endowments and pensions.
SHKFM acknowledges it does not have a direct channel to US institutional investors, although it is taking steps to develop relationships, says Gehin.
He adds that Nesbitt, who has connections with overseas investors from his posts at Asia Pacific Group and Swiss fund of hedge funds group Black Castle, “will facilitate in opening up potential markets”.