Inside the elegant Breakers Palm Beach resort, Bobby Jain made his multibillion-dollar pitch. His audience: the Abu Dhabi Investment Authority, steward of one of the world’s great petro-fortunes and, to Jain, a perfect client for his new hedge fund.
His vision — laid out in the hotel’s seafood restaurant — was ambitious, even unprecedented. He would hatch a giant, fully formed hedge fund that would trade a half-dozen strategies and employ hundreds of people globally from day one. It required quickly finding gifted traders amid an expensive talent war, building complex infrastructure over months and raising enough investor money to pay for it.
Failing to achieve even one of those lofty targets could tank the whole thing before it ever got started. Even Jain has likened the maneuver to landing three airplanes at once.
Many investors sat on the sidelines, skeptical of the deviation from the typical hedge fund playbook of starting small and building from there. While Jain initially set out to hit a record of as much as $10 billion, he later halved that goal.
But Jain, a onetime acolyte of Millennium Management founder Izzy Englander, won votes of confidence from key investors including the Middle Eastern sovereign wealth fund, which ultimately handed him about $1 billion. He raised $5.3 billion in total, the biggest launch since ExodusPoint Capital Management’s record $8 billion debut in 2018.
Interviews with about two dozen people with knowledge of Jain’s fundraising effort give an inside look into how the former Millennium co-chief investment officer pulled off one of the biggest-ever hedge fund launches earlier this month. It took a charm offensive with sweeteners like fee breaks just to reach his pared-down goal — showing how investors’ appetite for multistrategy hedge funds has plunged amid middling performance, long lockups and rising costs at other funds.
Getting investors on board was just the first step. What follows will test Jain, 53, as never before.
“There are a lot of moving parts, and this hasn’t been done before with this level of portfolio managers across multiple asset classes and strategies,” said Jon Caplis, founder of hedge fund research firm PivotalPath. “Clearly, a lot of thought and capital has been put into this launch. Still, the first few months will be closely watched.”
Clients who did back the firm say their investment is ultimately a bet on Jain, who helped Millennium push into new strategies and develop its central risk book. Now, he must prove he can deliver Millennium-like results without the resources of one of the world’s largest hedge funds.
Even in the best of times, fundraising and hiring for a new hedge fund are challenging. But this is one of the toughest climates in years. Potential clients have less cash on hand due to a prolonged deal drought that has crimped private equity payouts, and hedge funds are vying for scarce talent.
Moreover, Jain’s vision is more ambitious than most other debuts — and he’s under a brighter spotlight.
The firm, Jain and the Abu Dhabi Investment Authority declined to comment.
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