A $5bn-in-assets hedge fund is moving its headquarters from Singapore to London, in a boost for the financial hub threatened by Brexit.
Orchard Global Asset Management, an 11-year-old fund group with a focus on niche fixed income and structured credit strategies, is moving its HQ to the UK capital to be near the City’s large banking sector and to tap its “innovation” in debt markets, said two people familiar with the matter.
Orchard, set up in 2008 by former Deutsche banker Gary Wee and ex-Merrill Lynch banker Paul Horvath to capture lending opportunities in the wake of the credit crisis, has offices in Toronto, London, Singapore and Houston. It has been building up its London presence of late, with about 18 of the 24 new staff it has hired in the past 14 months joining in London.
Orchard declined to comment on its HQ move.
The relocation will be seen as a boost for London amid the political turmoil over Brexit and concerns over whether the City can retain its status as one of the world’s top financial centres, once outside the EU.
Financial services firms have shifted almost £800bn of assets to Europe since the EU referendum and added 2,000 new EU-based roles, according to a study by EY last week. However, that remains modest compared with the UK banking sector’s £8tn of assets and so far looks well short of consultancy Oliver Wyman’s predictions of about £35bn in revenues and 70,000 jobs potentially being at risk.
The effects of Brexit on the City’s fund management industry are still not entirely clear but are likely to be less than on the banking sector, which is planning to move thousands of jobs so it can still service clients after the UK’s departure from the EU.
The impact on fund managers depends on the type and domicile of fund that the investment firm is running, and can range from having to ensure a form of presence within the bloc to almost no direct effects at all.
Nevertheless, high-profile hedge fund trader Greg Coffey plans to relocate his firm to New York this year, in order to be closer to the US city’s financial flows, the Financial Times revealed in November. But the traffic has not been one way: in 2017 billionaire hedge fund manager Alan Howard headed back to London from Switzerland.
Other hedge funds are making contingency plans. London-based hedge fund Portland Hill has been considering opening an office in Paris, according to people familiar with the matter.
Orchard has recently completed a $2.5bn fundraising for a new fund that will co-lend alongside banks that have originated loans but which want to cap their exposure to the borrowers. Such loans, Orchard believes, can generate yields of 9 per cent to 14 per cent.
The fund also plans to provide protection against a share of the performing loans on a bank’s balance sheet, which frees up capital for a bank, in return for a fee.
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