Hedge fund managers and $10billion

Meeting hedge fund managers – 1

In the past couple of weeks, I entertained two hedge fund visitors passing through Singapore. One was from one of the world�s largest hedge funds, and he was on his way to another Asian country to buy a bank. Any one of his funds are at least $10 billion (that is US$10 billion). So he was a big man, although you could have missed him on the street.

We were seated in the quiet, quaint lobby of the Raffles Hotel. Very civilized surroundings. The guy was youngish. Very civilized himself. We chatted normally about everything. He used to be an assistant to former US vice president Al Gore, whom I had the privilege of hosting in Singapore last year, so we had something in common to talk about.

He also asked about the bank he was thinking about acquiring and I gave him my two-cents worth. It felt like meeting the angel of death on his way to Sodom and Gomorrah. Of course the nice folks in the bank have no clue what’s coming their way. But I do. Nice feeling.

But all the time we were chatting, I was distracted by something other than my friends in the bank. I was playing with the number $10 billion in my head. �Do you have any conceptual idea what $10 billion is?� I asked myself silently again and again, half listening to what he was saying. �This very nice guy runs through several $10 billion in a week,” I said inside my head. “He is such a nice guy with normal things in his head, so what’s the big give away?”

Slight built, about my height, maybe a bit more. His office is in some civilized place like Connecticut or outside Boston, dunno, don�t care. But hedge fund managers are like the dotcom guys. They have offices in nice, family-friendly cities in the US. Difference is that they are in the east coast, the �power corridor�, while the dotcom guys were mostly in the west coast. No more than 12-14 fund managers in the office at any one time. Probably all very pleasant people themselves.

The Asian Banker, an entire company of 40 people with offices in several locations, is probably run on a budget that is smaller than the expense account of one hedge fund manager. Isn�t that depressing!

Yesterday, I met with a senior Bangladeshi banker and he was explaining that his countries imports are about $1 billion a month. So, in a year, an entire country goes through $12 billion, and even then at a deficit, because the exports are much lower than that. Well, a reasonably large hedge fund management company goes through 6-8 funds of that size at a time. In GDP terms, they see more in an office of 12-14 people than entire countries of a few million people in the region do in a year.

What rally amazes me is the ability of hedge fund managers in America to raise billions of dollars. On CNBC the other day, the Squawkbox people were discussing an ex-SEC official who decided to set up a hedge fund, and he raised $10 billion as well. Just like that. No experience needed. Just a good story.

Also in the same week, I met with another hedge fund manager, who had flown down to Singapore on a Sunday evening just to have dinner with me. He wanted to know the potential for getting seriously wealthy clients in Asia. Minimum indvidual investment $10 million a pop � sorry for the small sum, this was retail, you see.

Why me? On a Sunday evening? It was very nice of him to seek me out, but hey, he was the one with all that money. I may not have billions of dollars, but I should at least get to keep my Sunday evening, right? But noooo. I am such a sucker for networking and meeting people. Give up my Sunday evening to give free advice to a milti-billon dollar hedge fund manager. What did I do to deserve this? Seeing all these money people pass by me! Maybe �somewhere in my youth or childhood, I must have done something� bad!

In any case, the nice guy who was going to buy a bank in another country chatted with me about the bank, and then about Al Gore and the conversation meandered towards return on investment and his opinion of Temasek. I know my postings can be long, so let me post this and then discuss Temasek in the next posting.