For just US$1 million, wealthy investors can buy a stake in hedge fund Millennium
Goldman Sachs is offering clients a stake in Izzy Englander's Millennium Management for a minimum commitment of US$1 million and as much as US$20 million, according to documents being circulated by the bank.
Millennium, which oversees more than US$78 billion, is seeking buyers for a 10 to 15 per cent equity stake in the firm at a roughly US$14 billion valuation. At the higher end of the range, that would mean a US$2 billion money raise, with roughly half coming from Goldman's Petershill Partners unit and the rest coming from Millennium, approaching large institutions, such as existing sovereign-wealth fund clients.
The Goldman team has been fanning out to canvass potential investors, including high-net worth clients and even people working at Millennium's main competitors, according to sources familiar with the matter, who asked not to be named as the discussions are private.
Millennium and Goldman declined to comment.
Tapping Petershill indicates an attempt to broaden out the group of potential buyers from institutions towards wealthy individuals.
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Petershill will put the money it raises in a special-purpose vehicle, which will then charge clients a 1 per cent management fee and 10 per cent of carry from the investment vehicle, according to the documents. Institutions buying their stakes directly in Millennium do not pay the additional layer of fees.
Millennium's history of consistent returns may draw investors. Since 1990, its hedge fund has lost money in only one year, 2008, when it fell 3.5 per cent. It has made 10 per cent or more in all but nine years. And its clients' money is locked up for five years, limiting the potential for sudden outflows.
Englander, 76, founded Millennium in 1989, building his hedge fund into a behemoth with more than 320 investment teams. Millennium has expanded so much in recent years that the company has started giving some of its capital to other hedge funds to manage.
Big-name hedge funds have sold stakes in the past. Millennium would be the first hedge fund giant to tap a wider range of buyers.
Earlier this year, Verition Fund Management entered into an agreement to sell a minority stake in the firm to Affiliated Managers Group. Last year, Ken Griffin said that he would be open to the possibility of selling a minority stake in Citadel, the multistrategy hedge fund he founded in 1990. BLOOMBERG
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