Hong Kong hedge fund manager Galaxy Asset Management has had a successful year with its pair of Greater China-themed funds and plans to launch a new strategy next month, having made two new hires to that end.
The Galaxy China Special Situations Fund will have an event-driven strategy and seek to mainly capture PIPE opportunities (private investments in public equity) in companies that are involved in mergers, asset injections and restructuring. It will also invest in pre-IPO deals among Greater China companies, mainly through Hong Kong-listed stocks such as H-shares, but also those listed elsewhere.
The strategy aims to start with $40 million to $50 million in assets and is looking for anchor investors in funds of hedge funds or family offices. Target returns are 30%-plus on less than 15% volatility. Fees are 2% management and 20% performance.
Galaxy's 11-strong portfolio management team, led by Joe Chan, will be involved in managing the new fund, but concentrating on it will be new arrival Joseph Chu, a former Hong Kong-coverage banker at CLSA, and Freeman Yim, who used to work at Rabobank. Chu and Yim have 19 and 15 years of experience, respectively.
UBS is the prime broker and HSBC the administrator for the new fund.
Even though the firm's assets under management dropped significantly from the peak of $1 billion in 2007, Galaxy's funds continue to perform well, with the Galaxy China Opportunities Fund up 32% this year and the Galaxy Deep Value fund that searches for bombed-out valuations in Greater China companies up by about 200%.