“Hedge funds are certainly looking to capitalize on the enthusiasm for private equity,” says an EY partner.
Two Sigma, one of the world’s largest quantitative hedge fund managers, has raised $1.2 billion for its new private equity unit, Sightway Capital.
Sightway reached the final close of its first fund, Sightway Capital I, the firm said Tuesday. Commitments came from a “diverse group of institutional investors,” including Massachusetts’ public pension fund, which approved investing as much as $500 million with Sightway last year.
“With the closing of our first fund and the support of our new partners, we believe Sightway Capital is well positioned to build on the current momentum of our portfolio companies,” division CIO Wray Thorn said in a statement. “We plan to invest this additional capital to further scale our established platform company investments and to drive long-term value for our investors.”
Two Sigma first began exploring opportunities in private capital back in 2008, according to the Sightway website. The quant firm launched Sightway in January of last year as a way of “building on these established investment capabilities and continuing its differentiated investment approach.”
Two Sigma’s push into private equity reflects a larger trend of hedge fund firms diversifying with the hot asset class and other non-traditional strategies, according to EY. The consulting firm’s 2019 global alternative fund survey, published last week, found that 26 percent of hedge funds offered a private equity product.
“There is high investor appetite for these products,” said Ryan Munson, a partner in EY’s asset and wealth management practice. “Hedge funds are certainly looking to capitalize on the enthusiasm for private equity.”
While hedge funds in general have experienced a decline in popularity in recent years, private equity funds have been magnets for institutional capital. According to EY, private equity accounts for about a quarter of allocators’ alternatives portfolios, up from 18 percent in 2018. Hedge funds, by comparison, declined from 40 percent to 33 percent over the same period.
“In today’s environment, there’s a view that if you’re able to have a diversified portfolio of products to go to market with, that will help you attract a diversified base of investors and help with the overall performance of your firm,” Munson said. “I certainly think we’re going to continue to see this trend of managers not looking to be one-trick ponies but having variety of products.”
Source: Institutional Investor
Read other recent News
Kraft Heinz positions for future growth with strategic separation of units
Kraft Heinz positions for future growth with strategic separation of units Kraft Heinz will separate into two listed businesses in an effort to reignite growth after years of underperformance, dismantling the $45bn merger engineered by Berkshire Hathaway and 3G...
Pantheon launches $4bn infrastructure secondaries fund with backing from Korean institutions
Pantheon launches $4bn infrastructure secondaries fund with backing from Korean institutions Pantheon has begun raising $4bn for its latest infrastructure secondaries vehicle, the Pantheon Global Infrastructure Fund (PGIF) V, with commitments expected from leading...
Karo Healthcare to acquire Perrigo’s €120m skin health portfolio after KKR takeover
Karo Healthcare to acquire Perrigo’s €120m skin health portfolio after KKR takeover Karo Healthcare has confirmed the acquisition of Perrigo’s Dermacosmetics portfolio of skin health brands, following the completion of its takeover by KKR. The deal, which is expected...