Morgan Stanley has hired Jenkin Leung as head of capital raising for Asia. Until last year, he was chief executive of Hong Kong-based hedge fund Hindsight.
That fund has been closed, and Leung's former colleague, Rocco Paduano, is now chief operating officer for prime broking at Credit Suisse in Hong Kong. Before joining Hindsight, Leung was a managing director in Lehman Brothers' institutional sales team.
In the newly created post, he forms part of a six-person global team, spread across New York and London. His job is to link up alternative investment firms with capital providers.
Leung reports in Hong Kong to Vincent Chui, head of Asia-Pacific equity distribution and David Russell, Asia head of institutional equities. Internationally, he reports to David Barrett, global head of capital raising in New York.
The capital-raising business differs from the capital-introductions function of prime broking, as it is not the classic 'matchmaking' service of prime broking, where it is hard to tell if an introduction ever results in a ticket being written. Instead its responsibilities include handling the process of due diligence and arranging roadshows right through to the execution of the investment.
In return, a fee is payable by the fund. Depending on the terms of the deal, it might be a one-off fee or a trailing fee payable over a period of a few years (the percentage usually declines annually over that time).
In other words, it is a remunerated capital-introductions service. It is most apt for mid-size and large-size hedge funds, but not so practical for tiny funds. That's because there is an economy of scale -- after the time spent on due diligence and conducting roadshows, the size of the likely investment would logically be bigger in a more sizeable fund.
Morgan Stanley says it is making this hire now in Hong Kong because its hedge fund client base wants to grow with institutional capital.