Hedge Fund Article on Clear Investments

Back from India, Trader Targets US
A young investment manager who spent two years trying to
set up a multi-billion-dollar private equity fund in India is
back in the U.S. with plans to launch a hedge fund on Dec. 1.
Palak Jain has begun talking to U.S. investors about Clear
Investments Growth Fund, which would make long and short
bets on the shares of gambling, energy and financial-services
companies. At the same time, she is looking to add one or two
staffers to her firm, Clear Investments, which she moved from
India to New York at the end of last year.
Since January, Jain has been investing her own money in
U.S. stocks. By riding the bull market with a series of long bets,
her “incubator fund” gained 312% in less than 10 months. Jain
is telling prospective investors that she plans to plow $300,000
of her own money into the hedge fund.
Born in India, Jain moved to the U.S. as a child and earned
an MBA at Carnegie Mellon’s Tepper School of Business. After
a stint as a consultant at Deloitte, she moved back to India in
2006 to seek profits in the booming investment markets. Clear
Investments, which Jain founded with Deepak Kavadia and a
silent partner, quickly became a darling of the local media. The
firm set its sights on raising as much as $10 billion for a private
equity vehicle targeting energy and infrastructure projects.
Jain, whose uncle is a top finance official in the Indian government,
used her political and business contacts to line up
commitments from Lehman Brothers, a private equity fund
run by the government of India and other institutional
investors. But her plans began to unravel as the financial crisis
worsened last year, culminating in the collapse of Lehman in
September 2008. Though Clear Investments had secured some
$300 million of commitments, it gave up on the effort before
putting any capital to work.
Back in New York, Jain is telling prospective investors that
the best opportunities in the near term lie in the U.S. stock
market, but she hasn’t given up on India. Over the next year,
she hopes to expand the scope of her investments to include
South Asia. v
Highview Pulls Plug on Energy Fund
Highview Capital, an energy-focused fund operator set up
three years ago by a Ritchie Capital alumnus, is throwing in the
towel on its only hedge fund.
Jeff Wallace, who previously managed Ritchie Energy
Fund, notified investors in a letter last week that his Highview
Avenue Energy Fund would wind down by yearend, barring a
last-minute capital infusion. Wallace’s Wheaton, Ill., firm will
continue to run money for managed accounts with an eye
toward building on that platform.
Wallace pulled the plug on Highview Avenue after one of
the fund’s original and largest investors redeemed all of its
shares. After losing 47% last year, the fund had shrunk to
about $8 million under management as of June. The firm had
another $25 million in separate accounts. Highview Capital
started out three years ago with about $40 million under management.
As the fund’s assets plummeted, Wallace said in June that
he needed to raise $10 million to $20 million of fresh capital or
would shutter the fund within a couple of months. In exchange
for an investment, Wallace offered a piece of the business or a
share of its fees. But no investors stepped forward.
Highview invests in the energy sector using corporaterelative-
value, commodities-trading and event-driven-volatility
strategies. The fund has performed well this year, gaining
58% through September.
Wallace was the chief executive and chief investment officer
of Ritchie Energy Fund before leaving in 2005 to start his own
firm. Ritchie Capital, a Lisle, Ill., firm founded by A.R. Thane
Ritchie, was once a multi-billion-dollar hedge fund manager,
but started winding down its two main hedge funds in 2006
following heavy redemptions and an exodus of executives. v
Prime Broker Eyes Growth in US
Newedge, an institutional brokerage launched last year by
Credit Agricole and Societe Generale, is looking to expand its
hedge fund-servicing business in the U.S.
Over the next 12 months, the firm plans to increase the
prime-brokerage headcount in its New York office, mainly in
the areas of marketing, business development and relationship
management. Globally, Newedge has about 125 prime-brokerage
employees. It also draws on some 200 staffers at Societe
Generale and Calyon, the investment banking unit of Credit
Agricole, for legal, compliance and risk support.
Leading the hiring effort is Jonathan Gane, head of business
and product development for the Americas. Gane, who relocated
to New York from London last year, currently oversees
only a handful of staffers. Even so, the U.S. prime-brokerage
business already is a substantial driver of Newedge’s overall
revenue.
Gane’s team is targeting fund managers whose investment
strategies match Newedge’s strengths, including managed
futures, foreign exchange, volatility trading and high-frequency
trading. It also is focusing on firms with substantial separate-
account businesses.
Newedge is playing up the financial backing of Credit
Agricole and Societe Generale, which each own a 50% stake in
the brokerage. The affiliation of the two French banks gives
Newedge flexibility to provide services across a broad range of
asset classes and instruments. Newedge was formed at the
start of 2008 via a joint venture between Calyon and Fimat, a
unit of Societe Generale. v