TPG linked to hedge fund launch

Texas Pacific Group, the US private equity firm, will reportedly be a partner in a new hedge fund business being launched by former Goldman Sachs star trader Dinakar Singh.

The Wall Street Journal reports today that Texas Pacific Group (TPG) is teaming up with former Goldman Sachs executive Dinakar Singh to launch TPG-Axon Capital, a hedge fund that will aim to raise up to $3 billion (€2.4 billion) in the coming months. The newspaper cites “people familiar with the situation.”

Singh, 35, was reported to be one of Goldman’s most highly paid employees in his most recent role as head of the bank’s $10 billion Principal Strategies department, a proprietary investment unit. He left the post last month.

The newspaper article said the partnership would give TPG a vehicle to trade the stocks of public companies. It also suggested the move was designed to extend the firm’s brand, which today is synonymous with management buyouts, into related areas.

Fellow US firm Blackstone Group has developed hedge fund, real estate and advisory activities alongside its private equity business. The Carlyle Group also has built a multi-strategy alternative investment business.

In Europe, Swiss fund of funds managers Partners Group and LGT Capital Partners are among the alternative asset managers that operate in both private equity and hedge funds.

Singh, said the Wall Street Journal, would benefit from the partnership with TPG by gaining access to the firm’s network of executives and stable of portfolio companies, providing him with a possible competitive edge in a hedge fund industry that has produced disappointing returns recently as managers struggle to find ways of identifying pricing inefficiencies.

The CSFB/Tremont hedge fund index, which measures the performance of a wide spectrum of different hedge fund investment styles, was down 0.3 percent in July.
Neither Singh nor TPG have commented on developments, citing Securities and Exchange Commission (SEC) rules.

TPG, which has built a strong reputation as a turnaround specialist, closed a new $5.3 billion private equity fund in February 2004.