New York (HedgeCo.Net) – JAT Capital Management, a multi-billion-dollar global equity investment firm founded by John Thaler in 2007 is returning client money in order to turn his $1.7 billion hedge fund firm into a family office.
“As I approach my 20th anniversary working in the financial services industry, with the last eight spent building and managing JAT Capital, it is the right moment to take a break, spend time with my young family and determine which path to pursue next,” Mr. Thaler said, according to the WSJ.
According to a recent study from Citi Private Bank, an increasing number of hedge funds are converting to family office structures for various regulatory and compliance reasons.
“It is absolutely the case that start-up managers have a much higher barrier to entry these days due to a combination of factors including the increasing need to develop an institutionalized platform with robust operational procedures in order to attract capital from sophisticated investors.” Meir Grossman, Investment Management Partner at Seward & Kissel LLP, said. “It is certainly the case that the time it is taking a manager to launch a fund has practically doubled from approx. 2-3 months to 4-6 months, especially given the trend of managers requiring a significant seed investment to properly launch.”
“However, the conversion from hedge fund management to family offices is really only happening at the upper levels of this industry as very few start up managers have the wealth to forgo a business and instead manage their own family office,” Meir said in a letter obtained by HedgeCo.
A family office or single family office (SFO) is a private company that manages investments and trusts for a single family. The company’s financial capital is the family’s own wealth, often accumulated over many family generations.
Family offices often provide family management services, which includes family governance, financial and investment education, philanthropy coordination, and succession planning. A family office can cost over $1 million to operate, so the family’s net worth usually exceeds $100 million. Recently, some family offices have accepted non-family members. (Source: Wikipedia)
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