The move underscores the strong confidence Blackstone has on Aaron Wertentheil. Competition for Blackstone’s seed funding is always fierce although critics say, the performance record of the seeder can be uneven no matter how thorough the due diligence.
According to two sources familiar with the matter at hand, Blackstone Group LP has decided to back Aaron Wertentheil’s hedge fund with a commitment of $150 million.
Sources reveal, Wertentheil is set to launch Jones Road Capital Management with roughly $300 million in assets, which includes capital from Blackstone; in addition to this, his sources of funds also includes money from Eric Mindich, his former boss at Eton Park, as well as an unidentified endowment.
New York-based Jones Road will concentrate on special situations investments in the corporate credit, government credit and equities markets, among others, said sources.
Blackstone’s commitment signals its strong confidence in Wertentheil and the firm has also commited to putting capital into a second portfolio that Wertentheil expects to raise after finishing fund raising for the first one.
Sources preferred the cover of anonymity since the investment is private.
Wertentheil could not be reached for comment.
Blackstone, which invests $78 billion in hedge funds, is making the investment with cash from its $1.5 billion Strategic Alliance Fund III, as it bets that new players can succeed in an industry that has struggled with poor returns and investor withdrawals in recent years. It has so far seeded six managers from this portfolio, including Tresidor Investment Management and Seiga Asset Management.
Incidentally, Blackstone’s seeders traditionally take a 15 to 25 percent cut of the fund’s business, said sources familiar with the terms.
Wertentheil worked for years at Mindich’s multi-strategy fund Eton Park, which made industry history for hedge funds when it raised a record $3 billion in 2004. Wertentheil oversaw more than a billion in assets at Eton Park and stayed on to help close the firm.
After Eton Park’s end in 2017, Wertentheil started generating buzz as someone who could start his own firm or join an existing one in a senior role.
James Connolly, who also worked at Eton Park, has joined Wertentheil and will be a partner and will hold a senior managing director role at Jones Road. Robert Renda is the firm’s chief financial officer. He has previously worked at Folger Hill Asset Management. Michael Adams will be the firm’s chief operating officer and general counsel.
Sources say, “securing seed investments from Blackstone often helps the new managers establish credentials and get up and running while it allows Blackstone to get in on the ground floor with promising newcomers”.