It's a bad week for Vikram Pandit, who is suddenly the former chief executive officer of Citigroup Inc., but a pretty good one for some of his old Canadian partners.
After leaving Morgan Stanley in 2005, Mr. Pandit's hedge fund firm, Old Lane Capital Management, made a strategic investment in a Toronto money manager called Diversified Global Asset Management. At the time, DGAM had about $1-billion of assets, and was just getting going under the stewardship of a group of Canadian hedge fund veterans.
Today, Old Lane is long gone, swallowed by Citi, and Mr. Pandit is out of a job. But DGAM keeps growing. Having long severed the Old Lane connection, DGAM has been steadily adding assets and is now managing and advising on more than $5-billion, with this week's addition being the wealth management division of the National Australia Bank.
DGAM's new client is planning to increase its hedge fund assets from $500-million (Australian) to double that in the next year to 18 months. As an advisory client, DGAM will help choose the assets, but they will stay on the client's balance sheet.
DGAM's business is built on helping clients pick hedge fund strategies and managers to run them, and overlaying that with trades designed to protect against big "tail risk" events. (For more on DGAM's strategy, here's a link to a previous Streetwise interview with DGAM chief investment officer Warren Wright.