The new firm, (part of Gopher AM, the asset management subsidiary of NYSE-listed Noah Holdings), directly invests in small mainland-based asset managers, according to William Ma, Hong Kong-based chief investment officer at both Noah and Gopher Asset Management.
Gopher Redwoods, together with its strategic clients, will either take a 10-20% equity stake in a firm or acquire the whole team, he said. The new firm received a Type 9 (asset management) and Type 4 (advising on securities) licences from the Securities and Futures Commission last month, according to the regulator’s records.
The firm was launched in order to move beyond private equity, which accounts for nearly 60% of parent Gopher AM’s $25.5bn AUM, according to Ma. The firm also manages real estate funds and fund of hedge funds.
Gopher Redwoods’ strategy is similar to Hong Kong-based fund-of-hedge-fund manager Penjing Asset Management, which has been seeding hedge fund managers in the past two-to-three years. The firm, together with its investors, receive a revenue kicker in addition to the investment returns the hedge funds make.
Ma was Penjing AM’s co-founder and held Type 9 and Type 4 licences at the firm from 2005-2015, according to SFC records.
Strategy variety sought
Ma said in a recent e-mail conversation that Gopher Redwoods will initially target offshore institutional clients.
It has already invested in five funds, which collectively manage around $2.2bn in assets. These include a global macro manager, a quantitative market neutral fund and a China asset-backed securities manager.
The firm is adding new domestic asset managers, including a China fixed income manager and a quant manager, Ma added.
Management hopes to find China-focused alternative investment strategies, including discretionary equity long/short, macro, quantitative and arbitrage/relative value strategies, he said.
“Initially, we will focus on alternative investment strategies in China, as we see more alpha opportunities on the China domestic equity market given its market inefficiency,” he said.
Ma explained that a number of small firms in China have sound investment strategies but remain unnoticed.
“In the hedge funds space, for example, there are 8,000 funds in China, but everyone is just investing in the top 10.”
He has high ambitions for the seeded asset management firms.
With Gopher Redwoods’ seed money, he said these firms will be able to upgrade their middle- and back-office operations and risk management to help them become global players.
Separately, Ma has become a responsible officer with Type 9 and 4 licences at Gopher Redwoods, SFC records show. However, he is no longer registered as a responsible officer at Noah Holdings in Hong Kong.
Ma was not able to reply in time for publication on whether his role has changed.