“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
Golden State Warriors parent tests $11bn valuation in minority stake sale
Golden State Warriors parent tests $11bn valuation in minority stake sale Golden State Group, the holding company of the NBA’s Golden State Warriors, is seeking investors for a minority stake that values the business at more than $11bn, according to Bloomberg. The...
Blackstone and KKR tapped as RedTape explores private equity exit
Blackstone and KKR tapped as RedTape explores private equity exit The founders of Indian footwear and apparel brand RedTape are exploring the sale of a majority or full stake in the business at a valuation of up to $510m, according to Reuters. The family has appointed...
Carlyle, Chevron and Quantum Capital emerge as frontrunners for $22bn Lukoil asset carve-up
Carlyle, Chevron and Quantum Capital emerge as frontrunners for $22bn Lukoil asset carve-up The Carlyle Group is among the frontrunners to acquire Lukoil’s international asset portfolio, valued at about $22bn, as the Russian oil producer races to meet a US-imposed...