Onetime wunderkind Nick Rohatyn, who made his name building J.P. Morgan’s emerging-markets business, is assembling a hedge fund backed by a group of business and banking luminaries. The biggest star of all: his daddy.
Rohatyn’s new money management firm, Rohatyn Group, has begun raising money for a hedge fund specializing in emerging-markets investments. New hedge funds are a dime a dozen, but Rohatyn Group has assembled a glittering global advisory board that seems likely to attract attention and money.
The list is topped by Felix Rohatyn, famed Lazard Frères investment banker and former U.S. ambassador to Paris. But the board is not just a family affair. Sources say other advisers include Liaquat Ahamed, president of fixed-income investment giant Fischer Francis Trees & Watts, as well as senior officials from Ayala Corp., a holding company in the Philippines with industrial and financial interests, and Mexico’s Cemex, one of the world’s biggest cement makers. Hedge fund industry executives say Rohatyn Group will raise some of its initial capital from prominent Latin American families, who will also serve as strategic investors.
Whether advisory boards help fundraising efforts is a matter of debate. “I think with someone famous in his area, like Nick Rohatyn, there’s some rationale,” says one hedge fund marketing executive. “In general, it’s not that effective. I don’t think capital allocators to hedge funds really care that much.” But a hedge fund investor disagrees, saying that family offices in particular find high-profile advisory boards appealing.
Joining Rohatyn in the venture will be several Wall Street veterans. Brian Lippey, former global head of foreign exchange for Merrill Lynch, will run Rohatyn Group’s Hong Kong office. Lippey was previously CEO of Tokai Asia, where he launched a Hong Kong money management unit and hedge fund for the Japanese bank.
Also coming on board is Peter Frey, a former senior sales executive at J.P. Morgan, and Ernest Stern, a former World Bank managing director and retired Morgan executive, say people familiar with the new firm.
It’s a dramatic career shift for the young Rohatyn, 42. In his 19 years at J.P. Morgan, he ran global credit and global emerging markets, then -- at the height of Wall Street’s Internet mania -- shifted to head up LabMorgan, a much-touted effort to incubate online finance companies. LabMorgan was shut down last year and its initiatives merged into other areas of the bank. Rohatyn, who became co-head of LabMorgan following J.P. Morgan’s merger with Chase, resigned in September 2001.
The Rohatyn Group hedge fund will focus on investing in emerging-markets debt and equity. Hedge fund industry executives say the group’s investment focus is expected to have elements of macro investing, which can involve taking bets on currency and cross-border interest rate movements. The fund will use moderate leverage and target returns of 12 to 20 percent, according to the firm’s initial marketing plans. Despite its start-up status, the fund will charge a relatively high asset management fee of 2 percent in addition to a hedge fund’s typical 20 percent of profits.
Nick Rohatyn did not return phone calls. A spokesman for the firm declined to comment. Reached at his New York office, Felix Rohatyn confirmed that he would serve on the new firm’s advisory board but laughed when asked if he was personally plunging into the hedge fund business. “No,” he said. “But I’ll help him any way I can.”
