Sparx Group completed the sale last week of its fund-of-hedge-funds business to MCP Asset Management, a Hong Kong-based fund-of-funds investor, which also has offices in Tokyo and Chicago.
The consideration for the sale of Sparx International (Hong Kong) Limited was not disclosed, but the terms of the sale include an ongoing distribution agreement on the part of Sparx for this business together with MCP’s other products. The name of the fund-of-funds business will, of course, lose the Sparx moniker.
The reason for the sale, according to Sparx Asset Management president Masaki Tanaguchi, is that Sparx did not consider fund of hedge funds to be a core activity any longer, and the assets under management of about $150 million constituted just a small amount of the firm’s total AUM.
“There hasn’t been a lot of hedge-fund activity in Japan recently,” says Tanaguchi. “Investors got stuck into some positions after the Madoff scandal and the crisis, and that’s only slowly starting to change, so capital may start to be re-deployed, though the resources are not huge.”
Through the crisis, Sparx's business was hit by performance and redemptions and total firm assets under management fell from $20 billion to $6 billion. In Japan, the AUM fell from $15 billion to $6 billion. The business is long-only in tandem with hedge funds, the latter accounting for approximately $2.5 billion in assets.
However, Sparx's hedge funds have shown signs of improved performance.
Their pan-Asia single manager hedge-fund business is spread across Asia from Sparx in Tokyo, to Cosmo in Korea through to PMA in Hong Kong.