Rothschild is aiming to sizeably increase its fund of hedge funds business via a US acquisition to provide the scale it needs to flourish in an industry dominated by a handful of big players, reported Reuters.
Rothschild made its first push into the business in 2012 when it bought fund of funds company HDF Finance for an undisclosed amount. It now has EUR5 to EUR6 billion (US$6.54-7.85 billion) under management in its hedge fund business, including a small presence in New York-based funds of funds.
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Jean-Louis Laurens, the chief executive of Rothschild’s asset management arm, said: "If you look at the US fund of hedge fund business it’s fairly concentrated.
"You have a couple of very large players and you have a number of smaller players, some of them struggling to remain in the business and falling a little bit below the US$5 billion mark that institutions or consultants would be comfortable with."
Funds of hedge funds enable the mitigation of the risks of investing in an industry that is vulnerable to sharp swings in valuations.
Top US fund of fund providers include Blackstone, HSBC, Goldman Sachs and UBS.
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By GlobalDataBy acquiring one of their smaller rivals, Rothschild would both lift that firm well above the investment threshold of institutions and allow it to broaden its offering to clients.
Laurens said: "Being more present in the US market and also having access to the US institutional client base makes sense for us."
Rothschild & Cie Gestion, which has approxiamtely EUR22 billion (US$28.8 billion) under management in total, has hired New York-based Cambridge International Partners, a boutique bank which specialises in the investment management industry, to assist it in finding a suitable target.
The Paris-based bank is also, reportedly, planning to start putting its own Rothschild label on select externally managed hedge funds.
