Benzinga's Daily Hedge Fund Briefing - January 22: Morgan Stanley To Raise Capital; Goldman To Wind Down

Morgan Stanley (NYSE:MS) has launched a new global initiative to raise capital for hedge fund clients in return for a fee, a company spokesman said.

The bank said on Friday that it had hired Jenkin Leung, former managing director at Lehman Brothers' institutional sales team, to head capital-raising for Asia. Leung was also chief executive of Hong Kong-based hedge fund Hindsight.

Dubbed the alternatives capital group, the six-member team was spread across New York, London, Hong Kong and Dubai, the spokesman said. Source

Goldman Sachs (NYSE:GS) has moved to wind down its Global Equity Opportunities Fund – once the flagship of its prestigious set of in-house hedge funds. The bank’s asset management division closed the fund at the end of December, according to a person familiar with the situation.

The move comes amid growing pressure on Wall Street banks to curb their in-house trading activities and a broader clampdown on risk taking. At its peak, GEO managed more than $7bn, but became one of the first blow-ups and bail-outs of the financial crisis when it lost close to $1.5bn in the first two weeks of August 2007. Source

Lord Mandelson’s declaration that a national interest test for foreign takeovers of British companies “is neither necessary nor desirable” was a rare moment of common sense during the voluble — and sporadically protectionist — response to Kraft Food’s £11.5 billion recommended takeover of Cadbury.

In a sense, the Business Secretary’s muted reaction to the Cadbury takeover was surprising, given the populist appeal of indulging in Union Flag-waving just months before a general election. Source

However, the Cadbury deal has put the focus on the role of hedge funds.

A report from FT says JPMorgan (NYSE:JPM) may be forced to pull just under $1bn it has invested in funds run by its flagship hedge fund, the $21bn Highbridge Capital, if new proposals from the US government to regulate banks’ use of proprietary capital go through.

JPMorgan took a majority stake in Highbridge in 2007 and full ownership in 2009, but was also one of the single largest investors in the firm’s underlying funds last year. The bank invested $225m in Highbridge in the first quarter of 2009, reversing a damaging slew of redemptions from other clients that had hit the fund and many of its peers after the collapse of Lehman Brothers in September 2008.

Meanwhile, Seven people were indicted Thursday in an insider-trading probe that has led to criminal charges against a number of hedge-fund executives and managers, including Raj Rajaratnam, the founder of hedge-fund firm Galleon Group.

The 10-count indictment, unsealed Thursday, expands charges against Zvi Goffer, who worked for a time at Galleon and is the founder of trading firm Incremental Capital, and six others who were originally arrested in the probe in November.