By Svea Herbst-Bayliss
BOSTON (Reuters) – Borealis Strategic Capital Partners, which invests in new hedge funds, has written its first check to commit capital to Europe-oriented stock fund Vor Capital, two people familiar with the matter said on Friday.
Vor Capital launched a year ago with a plan to invest in mid-sized European internet companies. It is run by Brant Rubin, who previously worked for hedge fund Luxor Capital.
Borealis did not answer a call for comment. Vor did not return an email seeking comment.
The sources did not say how much Borealis was committing but one said it would bring Vor Capital’s total assets under management to roughly $100 million.
Many institutional investors are giving hedge funds the cold shoulder, criticizing their high fees and generally lackluster returns. But investors are still eager to find promising newcomers who could outperform existing rivals and often wait until an established investor has made a commitment that could prompt others to follow along.
During 2018, its first year in business, Vor delivered returns of 15 percent, a person familiar with the returns said. Since January the fund has returned roughly 10 percent and it made money in December 2018, a time when most hedge funds lost money, the source said.
The average hedge fund gained roughly 6 percent in the first three months of 2019 after having lost 5 percent last year, Hedge Fund Research data show.
Borealis plans to provide start-up capital to roughly four to six funds, including some that might pursue activist strategies, one of the people familiar with the matter said.
The firm is run by Scott Schweighauser and traces its roots to Aurora Investment Management, a fund of funds that once managed $14 billion in assets. Schweighauser was Aurora’s president and oversaw the firm’s liquidation in 2016 after its owner Natixis Global Asset Management decided to shut it down.
Borealis is getting into the seeding business at a time it is becoming ever tougher for new hedge funds to sign up clients. Firms like Blackstone (NYSE:) Group, Paloma Partners, Protege Partners and Reservoir Capital Group also make start-up investments with new hedge funds.
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