According to a June 8 filing with the SEC, Brevan Howard “envisaged” that the U.S. unit registered with the SEC would initially manage about $300 million on behalf of the master fund run out of London. The unit, Brevan Howard US Investment Management LP, was slated to open in July, according to the document. In August, Brevan Howard’s U.S. unit amended its registration to say that the net assets totaled $800 million.
Brevan Howard, which is regulated in the U.K. by the Financial Services Authority, previously spun off a mortgage trading operation run in the U.S. by David Warren, a former managing director and chief operating officer in Morgan Stanley’s mortgage-backed securities department.
Warren in March 2009 set up his own firm under the name DW Investment Management LP. The firm manages money exclusively for Brevan Howard partnerships, including the Brevan Howard master fund and the Brevan Howard Credit Catalysts fund, and is on the same floor of a New York office building as Brevan Howard’s U.S. unit. DW’s assets under management totaled almost $4 billion as of March 15, according to a government filing.
While Warren controls investment decisions, Brevan Howard’s compliance department monitors DW’s daily trading activity, according to documents filed with the SEC. Brevan Howard also establishes all arrangements for the custody of securities in funds managed by Warren’s firm, and has the ability to prescribe risk mandates, the filing says.
Brevan Howard had also registered a brokerage unit in New York that helps raise money from American investors. About 64 percent of the money invested by pension plans and other institutional investors in hedge funds comes from North America, while Europe accounts for 24 percent, according to Preqin Ltd., a London-based research firm.
The firm is currently looking to the U.S. to raise money for a three-year-old currency fund. It filed an Aug. 9 private- placement notice with the SEC to raise an unspecified amount of assets for its Macro FX fund. The filing allows a hedge fund to raise money without going through the SEC’s registration process for securities, based on the regulator’s view that potential investors are sophisticated and able to fend for themselves.
“Fundraising is tough at the moment but easier in the U.S. than the rest of the world,” said Daniel Celeghin, a partner at Casey Quirk & Associates LLC, a Darien, Connecticut-based firm that advises asset managers. “U.S. investors are the friendliest market to hedge funds right now.”