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The fund has investor demand of over $1 billion for year one, according to sources familiar with the firm. To manage its portfolio ramp, Abax is accepting its funds in stages with an upfront installment of approximately $300 million.
Money was accepted from more than 40 investor groups globally with the highest concentration emanating from North America. Abax investors comprise leading pension funds, private banks, funds of funds and family offices, including a number of leading Hong Kong families.
Abax is now closed and has not disclosed specifics of its forward drawdown schedule except to its investors.
Abax's principal strategy is to make private- and public-sector long-term investments focusing on Greater China and Southeast Asia. Often, less liquid investments will be the modus operandi and in such magnitude as to make Abax an anchor investor in firms for large-sized investment stakes. Abax investments will be frequently between $30 million to $150 million in notional bite-size across credit, equity, and equity-linked structured transactions.
The ingredients of the strategy incorporate the themes that are currently dead centre in the alternative investor spotlight, such as private equity-style convergence and special situations.
The prime brokers are Merrill Lynch and Goldman Sachs. Lead counsel for Abax is Sidley Austin. In March, Morgan Stanley Investment management had invested an undisclosed amount to take a stake in the asset management company as a joint venture partner. This was Morgan Stanley's first such transaction in Asia, with Abax joining the ranks of other Morgan Stanley partners including Avenue, Lansdowne, and wholly owned Frontpoint.
Abax's operational plan has implemented a framework that will enable Abax to scale towards becoming one of Asia's first multi-billion dollar hedge fund platforms. Abax starts with 26 people, including four partners and an eight-member senior management team. Altogether, there are 14 investment professionals. The Abax team has an established pedigree of sourcing structuring, and investing in transactions for small and mid-sized enterprises that constitute a key part of the Abax investment program.
Chris Hsu is CEO of Abax. He was formerly a founding and managing director of the special situations group at Citadel in Hong Kong. With reverse-schadenfreude, some commentators have inevitably drawn attention to Chris HsuÆs precociousness at the age of 26. Whether age or HsuÆs support from a lineup team of industry veterans are a good or bad thing remains to be seen, but it is perhaps worth pointing out that Alexander the Great conquered Egypt and was declared son of Zeus by the oracle of Ammon when he was 26. (àAs opposed to the 'son of Hsu's'). Hedge-fund legend Eddie Lampert was 25 when he started ESL.
Hsu attended a Shanghai conference earlier this year when panelists were asked about their whereabouts during the Asian Crisis. He did not then have to respond that he was taking GSATs at that time.
Standing alongside Chris Hsu are seasoned investors, professionals, and three partners: Donald Yang, Abax's president and former head of Hong Kong and China debt capital markets at Merrill Lynch; Danny Yong, CIO and former Citadel managing director who was responsible for founding its Asia relative-value and macro teams; and Frank Qian, chief risk officer and also a former founding member of Citadel's Asia business.
Other managing members include Lee Ka Shao, who headed a multi-billion dollar principal strategies business at DBS, and Andy Shpiz, who ran Asia for Mellon HBV/Fursa Alternative. Abax's general counsel is Jamie Tadelis, who was previously regional counsel for Avenue Capital in Asia. Benjamin Happ is head of business development out of Morgan Stanley Investment Management's strategic acquisitions group. Keith Tan headed SME banking and a team of 180 people in Shanghai for Standard Chartered Bank.
"Abax" is the Greek genitive form of abacus, the counting tool invented by, guess who, the Chinese (and incidentally, co-invented at the same time by the Mesopotamians, though it didn't do them much good, as their civilization was conquered by Alexander the Great during his hellenization of the Near East). Invoked by a hedge fund, it is meant to inspire by its Asian origin, fundamental strength and dynamic intelligence.
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