(Corrects spelling of Eton Park in headline.)
Aug. 6 (Bloomberg) -- Blackstone Group LP plans to back a London hedge-fund firm being started by Robert Dafforn, a former partner at Eton Park Capital Management LP, according to three people with knowledge of the matter.
Blackstone, the world’s largest private-equity firm, has agreed to provide at least $150 million of seed capital for Dafforn’s new firm, said the people, who asked not to be identified because the investment isn’t public. Blackstone typically provides a seed investment in return for a cut of a hedge-fund manager’s fees and a stake in the company.
Money managers have turned to Blackstone and Goldman Sachs Group Inc. for startup financing as others sought stability in big, existing hedge funds after the 2008 financial crisis. Hedge funds managing more than $1 billion oversaw almost 90 percent of the industry’s $2.4 trillion of assets at the end of the second quarter, according to Chicago-based Hedge Fund Research Inc.
Dafforn, 32, left New York-based Eton Park in January after working at the company for almost six years, according to his registration with the U.K.’s Financial Conduct Authority. His hedge-fund firm will focus on credit investments, including distressed debt, which has been a target of hedge funds seeking to profit from the European fiscal crisis by buying discounted assets from the region’s banks, the people said.
Dafforn and Peter Rose, a spokesman for New York-based Blackstone, declined to comment on the new hedge fund.
Dafforn is at least the third London-based partner from Eton Park to leave in the past three years to start a hedge fund. The firm, founded by former Goldman Sachs partner Eric Mindich, was one of the industry’s biggest startups when it began trading in November 2004 with $3.5 billion.
Thierry Lucas, 41, departed Eton Park in 2011 to start Portland Hill Capital LLP, a hedge-fund firm that invests in stocks and bonds by wagering on rising and falling prices and corporate events such as bankruptcies and mergers. His hedge fund, which has grown assets to $130 million without taking a seed investment, gained 7.4 percent in 2012 after starting trading in June of that year, and has risen 5.2 percent through June 2013, according to a July note sent to investors.
Edward Misrahi, 43, started London-based Ronit Capital LLP this year after leaving Eton Park, according to his FCA registration. Misrahi was a founding partner at Eton Park and had been responsible for emerging-market investments at the firm, according to two people familiar with the matter.
London hedge-fund firms that have received startup financing from Blackstone in the past three years include Naya Management LLP, Carrhae Capital LLP and Denjoy Capital Partners LLP. Naya was founded by Masroor Siddiqui, formerly of The Children’s Investment Fund Management LLP, and Bruce Emery, who used to work at Citadel LLC. Ali Akay, a former SAC Capital Management LLC trader, started Carrhae in 2011 and Frederic Denjoy founded his firm the same year after working at Brevan Howard Asset Management LLP.
--Editors: Simone Meier, Jon Menon