Dominique Strauss-Kahn, former International Monetary Fund chief, plans to raise $2 billion for a new macro hedge fund.

Dominique Strauss-Kahn China IMF

Strauss-Kahn: Importance of China

Strauss-Kahn’s firm, LSK & Partners, which includes his daughter and economist Vanessa Strauss-Kahn, was on a promotional trip in China when they made the strategic announcement.

The importance of China, with over 650,000 millionaires and a rapidly emerging institutional appetite for alternative investments, is becoming a region that is increasingly more difficult for hedge funds to ignore.  The fact Strauss-Kahn announced his fund from the Asian nation rather than a European or US location is a nod to this growing importance.  Major Chinese institutional investors, such as the China Investment Corp, have been actively seeking alternative investments for diversification.  “China plays and will play a predominant role in this fund,” Mohamed Zeidan, the firm’s chief operating officer, said in a Reuters report.

No leverage or derivatives

The fund, which is waiting for regulatory approval in Luxemburg before it can accept funds, will not use leverage or derivatives.  The fund will be “as plain vanilla as it gets,” Mr. Zeidan said in a New York Times interview. “We have no leverage whatsoever.”

The new entity, the DSK Global Investment Fund, will follow macro economic trends and utilize the economic policy making experience of Strauss-Kahn to identify profitable trades.  Strauss-Kahn is a special economic adviser to the Serbian government.  He teamed with Thierry Leyne, a civil engineer and a member of the french society of financial analysts, to create LSK & Partners in 2013.

Strauss-Kahn fell from grace in 2011, the Times noted, in a sexual scandal stemming from an alleged encounter with a maid in a New York hotel.  He later settled the claims out of court and criminal charges were dropped.