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Enter the Dragon

Lehman/PMA veterans form a new hedge-fund company, DragonBack Capital, and launch a multi-strat product.
Hong Kong-based DragonBack Capital has launched its first hedge fund, the DragonBack Asia Pacific Equity Multi-Strategy Fund. The eight-strong teamÆs offering comprises of three core strategies: equity long/short, relative value and volatility trading.

The CEO of the new company is Rob Lance. He previously served as co-head of equities for Lehman Brothers in Hong Kong, and also notched 11 years of service with Deutsche Bank in Sydney, Malaysia and Hong Kong.

Philip Tye is COO. He was most recently the chief financial officer of Hong Kong hedge fund PMA, and was previously director of the Asia prime brokerage department for Credit Suisse.

The CIO is Matt Barnett. He formerly worked as a senior trader at Credit Suisse and JP Morgan, assisted the Asia set-up of an internal fund for Standard Bank in Hong Kong and started his career at Macquarie Bank.

Ken Niizeki is head of trading. He built the internal proprietary and derivative trading platforms at Morgan Stanley where he has worked for the last 17 years.

The fund has started with family assets of $7 million, but is now marketing to institutional investors with a one-year asset target of $250 million. A soft close and review will take place at that point, but ultimate capacity is estimated at $500 million.

Fees are 2% and 20%. There are no lock-ups for investors and redemptions are monthly subject to 90 days notice and a 2% redemption fee is payable back to the fund within the first year.

Target returns are 15-20% on volatility of less than 10%. Maximum leverage will be set at five times net asset value, with the long/short portion of the fund capped at maximum leverage of 200%.

Service provider credits go to Credit Suisse and Merrill Lynch as prime brokers, Walkers for legal counsel and HSBC as fund administrator. Execution systems are by TradingScreen, while Mediaworld carried out IT management and telecom installation and the portfolio/risk management system is provided by Imagine.

In a rare move for local hedge funds, and perhaps as testimony to their old-Hong Kong hand status, the partners in the firm have bought outright an entire floor of an office block in Queens Road.

The firmÆs name, DragonBack, references the benevolent god image of the mythical beast in Asia, the symbol of good luck and health. The partners of DragonBack are also keen outdoorsmen, and so the company name also refers to the popular hiking trail along the ridges of southeast Hong Kong Island, en route to the al fresco watering holes of Shek O.
¬ Haymarket Media Limited. All rights reserved.
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