February 14, 2013 7:30 pm

JPMorgan’s Gulati to launch own fund

JPMorgan’s global head of equity proprietary trading is quitting to set up a hedge fund in Switzerland in what will be the first prominent launch of a fund since several bank spinouts floundered last year.

Deepak Gulati, once one of the bank’s star traders, will launch Argentière Capital probably in the second or third quarter of this year, according to two people familiar with the plans.

In a snub to London, Europe’s main hedge fund centre, the firm will be based in Zug, the low-tax Swiss canton best known as the home of global commodities trader Glencore. The fund is named after a French ski resort near Chamonix. Mr Gulati’s team, who work from JPMorgan’s offices in Zurich, will leave with him.

Marketers said they expect Argentière to raise as much as $500m for its launch, an amount that would make it one of the most prominent hedge fund start-ups in recent years. The fund could quickly double in size if performance following its launch is strong, they said.

Argentière will follow Mr Gulati’s equity event-driven style of investing, where traders look to profit from movements in companies’ stock prices based on corporate announcements such as mergers or earnings.

Investment banks saw a spate of high-profile hedge fund spinouts in 2010 after US lawmakers passed the Dodd Frank act, which prohibits banks from outright speculation with their own money.

Several of the spinouts have suffered since, with rangebound markets dominated by political sentiment providing few opportunities from which hedge funds could prosper. Investors in hedge funds have also proved to be demanding of managers with which they invest.

Goldman Sachs’ former head of European proprietary trading, Pierre-Henri Flamand, had to shut his firm, Edoma Capital, in November, two years after spinning it out from the bank.

JPMorgan had planned to re-house its proprietary trading teams within its asset management unit. Although its head of credit prop trading, Fahad Roumani, opted to shift into the division in 2011, the bank’s global head of prop, Mike Stewart, left the firm and established his own independent hedge fund last March.

Mr Stewart’s departure is understood to have prompted Mr Gulati to explore leaving the firm as well. JPMorgan declined to comment.

Mr Gulati is still technically employed by the bank. He is departing on amicable terms, colleagues say.

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