Institutional Investor's Alpha Magazine - December 2007/January 2008 - (Page 43)

Proﬁle Próxima Alfa Investments Buy and Hold I By Joshua Levitt n 2003, Julian Barrowcliffe took a one-year sabbatical from his job as global head of energy trading at Bank of America Corp. in New York to care for an ill family member. When it was time to return to the trenches, the lifelong commodities trader wanted to start his own hedge fund. Barrowcliffe did not relish the management responsibilities that come with building a company, but he also had no interest in being an employee again. “I met with plenty of funds, and they all said, ‘Sure, Julian, we’ll put up the money, and you trade for us,’” the tough-talking Englishman recalls. “They walked me into a room full of terminals and pointed to the empty chair, seat 5, row B — ‘Now get to work.’ I didn’t want that either.” Barrowcliffe found the solution to his conundrum in the form of VegaPlus Capital Partners, a hedge fund incubator created by Madrid-based Vega Asset Management in 2004. In July of that year, Barrowcliffe launched the New York– based Anglian Commodities Fund with $100 million from Vega, then one of Europe’s two biggest hedge fund ﬁrms, which provided him with the same operational infrastructure and support it used for its own funds while giving him complete autonomy over Anglian’s investments. Today, Barrowcliffe and his eight-member team manage about $850 million in assets as part of what is now called Próxima Alfa Investments, a joint venture between Vega and Spanish bank Banco Bilbao Vizcaya Argentaria. The Próxima platform gives managers like Barrowcliffe start-up capital and management expertise in exchange for up to half of the proﬁts. Próxima pays for computer systems and staff, including accountants, lawyers, salespeople and round-theclock information technology experts. “At Próxima, Julian owns his own business,” says Próxima U.S. CEO Michael Mann, former president of Vega. “In essence, we all work for him.” Próxima began taking shape in early 2006, when BBVA agreed to inject $1 billion into VegaPlus. BBVA is a majority owner of the $2.6 billion platform, whose ten funds offer strategies ranging from long-short equity to ﬁxed income. For Vega the venture represented a welcome infusion of cash. With satellite ofﬁces in New York and London, Vega Backed by Spanish saw its assets under management plunge to $1 billion, bank BBVA and from more than $11 billion in 2004, as a result of poor onetime hedge fund investment performance in 2005 and 2006. giant Vega, Próxima So far Próxima has strugAlfa Investments has gled to gain traction, despite investor enthusiasm for hedge built a business around fund platforms. Although several of its managers, including seeding and supporting Barrowcliffe, are putting up promising managers. To good performance numbers, total assets haven’t grown succeed, the ﬁrm must since the rebranding. The cost of providing both seed capibe able to retain them. tal and infrastructure makes Próxima impatient for results; in 2007 it dumped three underperforming funds. But the platform’s biggest challenge is cultivating talented managers whose goals align with its own — and making it worth their while to stick around. Próxima is BBVA’s ﬁrst major push in hedge funds. With more than E410 billion ($597 billion) in assets, the BilbaoDECEMBER 2007/JANUARY 2008 • INSTITUTIONAL INVESTOR’S ALPHA • 43

Table of Contents Feed for the Digital Edition of Institutional Investor's Alpha Magazine - December 2007/January 2008

Institutional Investor's Alpha Magazine - December 2007/January 2008 Contents Letter from the Editor Longs & Shorts Pension Corner: Liberal Returns The Good Guy: Inner-city MVP Cover Story: Marathon Men Interview: Rizk Management Profile: Living on Hostile Ground Profile: Buy and Hold In Theory: The Fallacy of Portable Alpha Strategies: Changing Course Alpha Bytes: Behind the Scenes Unhedged: Commentary: An Activist Alternative

Institutional Investor's Alpha Magazine - December 2007/January 2008

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