A former Soros Fund Management team will start a Hong Kong-based hedge fund in the third quarter of 2014 with at least $150 million in initial capital including seed capital from HS Group, making it one of the biggest start-ups in the region this year.
Co-founded by Kenneth Lee and Michael Yoshino, the long/short equity hedge fund firm, Pleiad Investment Advisors, will focus on investments in China and Japan.
Hedge fund start-ups in Asia on average raised just over $50 million each last year, according to data from industry tracker AsiaHedge, although the biggest of 2013, Asia Research & Capital Management, raised $1.1 billion.
Most of Pleiad's capital will come from HS Group, a firm founded last year by Michael Garrow, an ex-Blackstone Group executive, and Johannes Kaps, who earlier worked at Goldman Sachs.
The investment represents HS Group's first seed capital investment and one of the biggest ever seed capital investments in a hedge fund in Asia, where a typical seed investment is usually around $25 million.
Seeders usually pocket 20-30 cents of every dollar earned by a hedge fund in addition to their share of the return generated. Many smaller managers and those looking to start in Asia are willing to share revenues in exchange for long-term capital.
HS Group's backers include Swiss fund-of-hedge-funds manager Gottex Fund Management Holdings and V-Nee Yeh, co-founder of Hong Kong-based money manager Value Partners.