JP Morgan has teamed up with Crestline Investors, a Fort
Worth, Texas-based fund of funds with $7.3 billion of assets
under management, to help investors unwind their legacy
positions in illiquid hedge funds and other assets. The
initiative will see JP Morgan assist Crestline in sourcing
these assets in the marketplace.
"For many hedge fund investors, it's time to move on," said
Thomas Doyle, the recently-appointed head of fund-linked
product structuring at JP Morgan in London. "The market has
seen a variety of approaches to the management of legacy
positions in hedge funds over the last few years but the
combination of attractive pricing in the secondary market, the
calibre of interested counterparties, and the ability of new
market participants to engage in large-scale structured
transactions now makes divestment of these assets
The secondary market in illiquid hedge fund shares has
developed substantially since its infancy in 2009, with various
market estimates indicating that hedge fund investors are still
holding up between $50 billion and $60 billion of illiquid
assets in Europe.
But the market is dominated by just a small number of
specialist fund managers, such as Crestline, who are
increasingly securing investment from institutional clients who
have significant amounts of capital to deploy in this
"We are delighted to work with JP Morgan in identifying
investors interested in divesting legacy hedge fund shares,"
said Douglas Bratton, president and chief investment officer of
"We look forward to having discussions with interested
parties on meaningful, private divestures of their illiquid
positions. Crestline's industry-leading hedge fund secondary
platform will ensure firms have the opportunity for genuine
bilateral negotiation and creative asset structuring."
Crestline has already raised approximately $1.2 billion in
capital for this initiative since 2009 with a target final
close for their third fund in November 2013, which makes them
amongst the biggest players in this market, according to JP
Morgan's Doyle. He added that it is a good example of how the
US bank can assist firms across their business cycles, whether
it be investing or divesting themselves of assets.
Following its purchase of Northwaters and Lyster Watson's
businesses, Crestline now offers low volatility and customised
hedge fund of funds, opportunistic and customised investment
programmes including a family of opportunistic strategies,
hedge fund secondary investments and private credit funds and
tailored beta and hedging strategies.