Goldman Sachs may have been leading the way in recent times in the field of hedge fund spin-offs, but Citigroup are rapidly catching up.
Former head of proprietary trading Sutesh Sharma looks set to launch his $500 million hedge fund later this year, on the back of impressive ~%15 annual returns on his $2 billion Citi portfolio. He also boasts the same head of proprietary trading position at Morgan Stanley on an impressive CV.
The fund, called Portman Square Capital, will be based in London, and is part of a broader shift in the financial world that comes as a result of the Dodd Frank Act, which attempts to limit the extent to which banks use depositors’ money for speculative purposes.
Sharma has taken with him some of his long-term colleagues from the Citi trading floor, as well as some from one of his previous ventures, Old Lane hedge fund. Yusaf Khan and Lalit Das will join as partners.Together, they will hope to emulate the success of Sharma’s close acquaintance Vikram Pandit, Citigroup’s CEO since 2007. Pandit ran Old Lane Partners, a hedge fund that despite delivering ‘meagre returns’, was bought out by Citi in 2007 in a transaction that elevated him through the company.
He is reported to have personally earned $130 million from the acquisition. Citi closed the fund down just 11 months after the purchase as it faced the uncertain financial climate in 2008.As a result of these new regulations, increasing numbers of successful individuals are leaving their parents firms and starting up funds of their own. Portman Square Capital will be one of the largest of its kind in 2012, and one of the most widely-anticipated.
Hedge Funds reported their biggest gains since 2007 in the first quarter, and economists and politicians alike will be hoping that their re-emergence into profitability will herald a turning tide in the global economy.