Tribridge Capital, a fixed-income specialist based in Hong Kong, is set to launch its Asia-ex Japan hedge fund later this month with $20 million in assets. Tribridge's CIO, Eugene Kim, says the new fund has a strategic tie-up with the asset management arm of Hong Kong conglomerate Sun Hung Kai, which has taken an equity stake in the fund and contributed to a portion of the start-up capital.
"We're extremely pleased to have tied up with Christophe Lee and his team at SHK as a strategic investor in our fund," says Kim. "As we're a newly launched hedge fund, their involvement will help boost our credibility and be extremely beneficial in raising our profile, particularly thanks to their extensive relationships in the Greater China region."
He expects SHK will be able to market the fund through its retail channel in Hong Kong as well as through its institutional relationships in Asia and Europe.
In addition to SHK, the all-Korean Tribridge team has been able to draw on some of its own relationships to raise seed capital. Kim says a core group of Korean financial institutions, including banks and insurance companies, have contributed a significant amount of the initial capital to the new fund.
As its name suggests, the Tribridge team is made up of three key partners. Kim as CIO is a fixed-income specialist, and has worked at Nomura in New York as portfolio manager focused on high yield and as an investment banker at ING and Barclays in Asia focusing on the origination and structuring of debt transactions.
He is joined by Park Yuh-chung, CEO, and Yun Sun-woo, chairman. Park has worked as an investment banker at Morgan Stanley and a fund manager for Jardine Fleming's Korean portfolio. Most recently he launched a start-up technology company in Korea.
Yun brings to the team over 30 years of experience in Korean banks and corporations including Jinwoong, Kexim Bank, Dongwha Bank and LG Investments.
Tribridge's launch represents the gradual diversification of Asian hedge fund strategies, which are still overwhelmingly equity dominated. Currently, there are only a handful of players in the Asian fixed-income hedge fund space, including Hong Kong-based Income Partners and Sydney-based Basis Capital.
Kim says his strategy is fundamentally driven and credit oriented, with arbitrage and event-driven making up the two main investment styles. The fund will seek investment opportunities across the whole of the Asia ex-Japan region.
"Our investment universe is greater than $1 trillion, and includes the offshore bond market, the loan market and the local currency market," Kim explains.
He is targeting an annual return of 10%-15% net of fees with minimum levels of volatility. The fund will employ leverage of up to five times, and is currently operating at a leverage of three to four times.
The fund has employed CSFB as its prime broker and HSBC as its fund administrator.
Kim's current outlook on the credit market is pessimistic. "Spreads are extremely tight and rising default rates will continue to put pressure in this direction. We're positioning our portfolio against this backdrop and are aiming to keep our investments as market-neutral as possible so that we are in a position withstand any potential shocks," he says.
At the moment, Kim sees opportunities in arbitraging the spread between the local bond market and offshore bond market, and between the CDS and the swap market. "There are also a few selected event-driven opportunities from expected M&A and distressed deals," adds Kim. "On the short side, we see the high-yield market as a good opportunity at the moment as this is currently overvalued."