Cantor's Matthews Exits Firm, Seeks $500 Million for Hedge Fund

(Bloomberg) -- Cantor Fitzgerald LP’s Shawn Matthews is stepping down as head of the firm’s broker-dealer unit and plans to start a hedge fund.

Matthews spent nine years leading the division, Cantor Fitzgerald & Co., working to wrest talent and market share from larger investment banks that retrenched after the 2008 financial crisis. He’s launching a macro fund called Hondius Capital, looking to capitalize on a new era of market turmoil, Cantor Chief Executive Officer Howard Lutnick announced in an internal memo.

The plan is to raise as much as $500 million, of which 20 percent has already been secured, Matthews said in a telephone interview. He’s seeking to open this year and hire roughly 10 people. Hondius will seek to benefit from renewed market volatility and central banks beginning to take liquidity out of the system, he said. Matthews, 51, isn’t being replaced, according to a person with knowledge of the decision who asked not to be identified discussing internal deliberations.

“It’s just time,” Matthews said. “Cantor’s in great shape. I’m leaving them in very good shape and I’m taking the next step. Cantor is still going to be a big part of my life. I’ll still be in the building with them.”

Cantor President Anshu Jain, formerly the co-CEO of Deutsche Bank AG, has been reshaping the financial services firm’s Wall Street operations since joining at the start of last year. He’s sought to push further into fixed-income and equities trading as well as prime brokerage, a business that caters to hedge funds. The firm also has hired dozens of deal advisers to expand investment banking.

Lutnick said in his memo that Cantor will be involved in Matthews’ new venture.

“We expect to seed the new fund, act as one of its prime brokers and plan to provide support and office space,” Lutnick wrote. He said he looks forward to “seeing it succeed in today’s volatile macro environment.”

It won’t be Matthews’ first hedge fund. Before joining Cantor in 2005 and running operations including debt capital markets, he was the managing partner of money manager Alchemist Capital Management.

“We’re going to get into a much more challenging place” in the economy, Matthews said. “But that creates opportunity for interesting shorts, an interesting opportunity for relative value trades, and places to create alpha.”

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