CITIC Capital Helps Former FX Concepts Executives Start A New Fund

CITIC Capital Helps Former FX Concepts Executives Start A New Fund
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China’s CITIC Capital Holdings Ltd is investing in a new New York-based fund started by former executives of FX Concepts, sources familiar with the matter told Gertrude Chavez-Dreyfuss of Reuters. FX Concepts filed for bankruptcy last year. CITIC Capital has more than $4 billion in assets. It’s the private equity arm of China’s oldest conglomerate CITIC Group Corporation.

How much CITIC Capital plans to invest in the new fund?

Bob Savage, former chief strategist and chief operating officer of FX Concepts, and Ron DiRusso, the director of research and co-chief investment officer have started the new fund. DiRusso was also managing FX Concepts’ volatility fund, which performed relatively well before the hedge fund filed for bankruptcy on October 17, 2013. Savage said last month that he is likely to be a part of a new fund in 2014.

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Sources didn’t reveal how much CITIC Capital plans to invest in the new fund. But given the Chinese firm’s size and background of DiRusso and Savage, the South China Morning Post estimates that CITIC Capital may pour in about $300-$400 million. Sources said that negotiations between CITIC Capital and DiRusso and Savage began in February 2013, when FX Concepts was floundering. At its peak, FX Concepts had more than $14 billion in assets under management. But today it has less than $2 million. Investors started pulling out their money as FX Concepts’ returns deteriorated due to pathetic performance of its systematic trading business.

Did FX Concepts execs want CITIC Capital deal to be secret?

It’s still unclear what type of fund DiRusso and Savage will be managing. Sources said that the two intend to operate it like a hedge fund. They have already hired many of FX Concepts’ junior employees. But FX Concepts founder John Taylor was unaware of his lieutenants negotiating a new venture with CITIC Capital. Taylor and Savage were said to have acrimonious relations. John Taylor was unhappy with FX Concepts’ chief strategist after Savage began acting like a spokesperson of FX Concepts when it was in trouble.

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