CI Financial Corp. is venturing further into the Canadian hedge fund arena, saying it has bought a "significant minority interest" in fledgling firm Lawrence Park Capital Partners Ltd.
It is the second equity investment by the mutual fund giant in the alternative strategy space. In 2010, it took a 35-per-cent stake in Toronto-based Red Sky Capital Management Ltd. This firm now has $58-million in assets in its equity-oriented Red Sky Partners hedge fund.
"We are trying to expand into the alternatives asset segment, and it's just a question of identifying and picking the right partners," CI Financial chief executive officer Stephen MacPhail said Tuesday. "We hope that we can make another investment by the end of 2012."
The long-term strategy, he said, is to package hedge funds with different mandates into a portfolio [also known as a wrap-program]that can be sold to high net worth clients in CI Financial's financial planning arm, Assante Wealth Management, or other investors.
The strategy is somewhat similar to the business built up by Toronto-based Arrow Hedge Partners, which focuses on hiring external mangers to run its funds as opposed to taking an equity stake in them.
"What we like to do is get involved…and provide what I would call 'administrative oversight' " to newly launched hedge fund firms, Mr. MacPhail said. "It gives investors a lot of comfort that a big institution like CI is involved."
He would not elaborate on the size of the stake in Lawrence Park Capital Partners, except to say that it would be similar to CI Financial's 35 per cent equity stake purchase of Red Sky. Red Sky was founded by Tim Lazaris, formerly of GMP Investment Management L.P., which he helped to co-found.
Next month, Lawrence Park Capital, which was started last year by David Fry and Andrew Torres, will launch its first hedge fund based on fixed-income and credit strategies.
CI Financial's long-time alternative strategy offering has been CI Trident Global Opportunities, but this fund is run by external manager Nandu Narayanan of New York-based Trident Investment Management LLC.
For just over a decade, however, CI Financial has had a 25-per-cent equity stake in U.S.-based Altrinsic Global Advisors, which has grown its institutional and mutual fund assets to more than $11-billion. "That has worked out very well for us," Mr. MacPhail said.