A statement released today, April 22nd, announced that a new Asia-focused hedge fund named Pleiad Investment Advisors will be established in Hong Kong in the third quarter of this year. The fund will be managed by the former Soros Fund Management China and Japan specialists Kenneth Lee and Michael Yoshino. The new pan-Asia fund will commence operations with more than $150 million in capital from its founding partners and the HS Group, according to the statement.

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Analyst assessment

“The founding partners have first-class pedigree and track record [with Soros Fund] which will help with fundraising,” said Will Tan, a recruiter with Principle Partners Pte in Singapore. “A seeder who is committed to the long-term success of the fund and can write a cheque of at least $100 million are important factors.”

First investment to the Asian hedge fund from HS Group

The deal to hedge fund Pleiad is the first investment for HS Group, a company set up by Michael Garrow, a former partner in the The Blackstone Group L.P. (NYSE:BX), and Johannes Kaps, formerly of Goldman Sachs Group Inc (NYSE:GS). HS Group was established to provide long-term capital to startups and relatively recent Asia-based hedge funds. Smaller funds need long-term strategic investors such as HS Group in the current environment where most investors favor established managers with larger funds and more assets.

According to the statement, most of the funds for the Pleiad deal are coming from HS Group’s Sponsor Fund.

Analysts also noted that this $100 million plus deal is one of the largest seed capital investments ever made in an Asian hedge fund, where seed investments usually average in the neighborhood of $25 million.

Interview with HS Group head Garrow

Michael Garrow, HS Group’s chief investment officer, was interviewed by telephone “Pleiad will have a senior team of more than six people,” he said, “including two analysts, a chief operating officer and a chief financial officer.”

Garrow believes Pleiad can eventually manage up to $1.5 billion to $2 billion. He went on to explain that the fund’s strategy is to make “long-term, concentrated investments” in liquid companies, choosing stocks based on a a combination of fundamental analysis and industry research.

Pleiad plans to maintain a “moderate” overall net exposure by making both long and short investments, Garrow explained, distinguishing it from the typical long-focused Asian fund that profits the most in a bull market.  “We think it’s an all-weather strategy,” Garrow said.