Former BlackRock Exec Gets $200 Million Backing From Blackstone

(Bloomberg) -- A hedge-fund startup run by Michael Phelps, a former head of European credit at BlackRock Inc., has attracted a $200 million investment from Blackstone Group LP, according to a person with knowledge of the matter.

That puts Phelps’s Tresidor Investment Management on course to become one of the largest new funds in London this year. Stuart Roden, a former chairman of Lansdowne Partners, is also backing Tresidor and will join as a non-executive chairman, the person said, asking not to be identified because the information is private.

Spokesmen for Blackstone and Tresidor declined to comment. Roden confirmed that he will start in his role in April, but declined to comment further.

Tresidor’s initial success contrasts with the worst money-raising environment in years as investors revolt against poor performance. The average size of new funds has tumbled 72 percent since 2000 to just $28 million, while more hedge funds have closed than opened in the past three years, according to Singapore-based data provider Eurekahedge.

Phelps and Edgar Senior, Tresidor’s chief executive officer, have put most of their liquid net worth in the fund. Together with Roden, friends and family, they’re injecting about $50 million into Tresidor. The multi-strategy European credit hedge fund is set to start trading on June 3, and seeks eventually to raise about $1.25 billion, the person said.

Getting backing from investors such as Blackstone is key for hedge-fund startups these days, as they fight rising compliance costs. The investing giant is increasingly focusing on bigger startups from well-known managers with strong track records. It has also provided seed capital to Himanshu Gulati, a former head of U.S. distressed credit at GLG Partners.

Tresidor will focus on trading securities such as European high-yield bonds, leveraged loans, convertible bonds and sovereign debt. It will initially have a 15-member team, including 10 investment professionals.

Fixed income and credit hedge funds raised a net $3.4 billion last year, while the industry as a whole suffered $35 billion in outflows, data from eVestment show.

Phelps was the lead portfolio manager for European leveraged finance and credit alternative portfolios at BlackRock, and oversaw $35 billion for the world’s largest money manager until the end of 2017. The University of Cambridge alumnus joined BlackRock in 2009 after the firm acquired R3 Capital Partners, where he was a partner, according to Tresidor’s website.

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