GIC pledges US$100mil to hedge fund

SINGAPORE: GIC Pte has committed up to US$100 million to a hedge fund started by David Mercurio, a former employee who worked at the Singaporean wealth fund for a decade, according to people familiar with the matter.

GIC has backed Lauro Asset Management, a long-short equity fund founded by Mercurio, who left the wealth fund in 2011, according to the people, who asked not to be identified because the matter is private. GIC will invest as much as US$100 million, capped at 50% of the fund’s assets.

Lauro had US$35mil under management as of April, according to documents obtained by Bloomberg. Mercurio’s Singapore-based fund returned 4.7% in the first four months of this year, in line with the average 4.5% gain for equity long-short funds, according to data provider Eurekahedge Pte.

GIC is turning to alternative assets including private equity, hedge funds and real estate to boost returns amid expectations low interest rates will weigh on earnings in the coming decade. Low yields, modest global growth and inflated valuations for many assets may curb returns for as long as 10 years, the state fund said in its latest annual report. GIC has injected money in other hedge funds started by former employees. It seeded Avanda Investment Management Pte, co-founded by former group chief investment officer Ng Kok Song in 2015. In 2012, the wealth fund backed Nuvest Capital Pte, set up by Aje Saigal, a former chief investment officer of global equities.

Mercurio joined GIC in 2001 and was senior portfolio manager at the time he left the wealth fund, according to his LinkedIn profile. Until 2015, he was head of Asian equities at hedge fund GLG Partners, which was acquired by Man Group Plc in 2014.