Farallon Capital

Last updated
Farallon Capital Management
Company type Limited partnership
Industry Hedge fund
FoundedJanuary 1986;38 years ago (1986-01) [1]
Founder Tom Steyer
Headquarters
One Maritime Plaza
San Francisco, California [2]
,
U.S.
Area served
Worldwide
Key people
Andrew J.M. Spokes (Managing Partner)
AUM US$ 39 billion
(as of September 30, 2022) [3]
Number of employees
230+ (2021) [4]
Website faralloncapital.com

Farallon Capital Management, L.L.C. is an American multi-strategy hedge fund headquartered in San Francisco, California. Founded by Tom Steyer in 1986, [5] the firm employs approximately 230 professionals in eight countries around the world. [4]

Contents

Farallon primarily manages capital for university endowments, foundations, and high-net-worth individuals. [1] The company manages assets reportedly worth $39 billion. [6]

History

Farallon was founded by Tom Steyer in January 1986 with $15 million in seed capital. [1] Before starting Farallon, Steyer had worked for San Francisco-based private equity firm Hellman & Friedman, as a risk arbitrage trader under Robert Rubin at Goldman Sachs, and in Morgan Stanley's corporate mergers and acquisitions department. [5] [7]

Farallon was one of the first hedge funds to raise money from a university endowment. [8] In 1987, Steyer, who received his bachelor's degree from Yale, approached the university's endowment to allocate funds for Farallon to manage. [9] The Yale endowment declined based on the fees charged by Farallon. David Swensen, Yale's chief investment officer, later arranged with Tom Steyer that Farallon would initially manage an allocation of the Yale endowment for no fee. [9] After Yale's investment proved to be lucrative, many other college endowments and pensions began to invest in hedge funds. [8]

Investment strategy

Farallon claims to have pioneered absolute return investing, a model focusing on potential returns as well as risk adjusted returns. [10] Farallon invests in various asset classes including value investments, credit investments, merger arbitrage, real estate related investments, and direct investments in both developed and emerging markets. [11] As of 2005, Farallon reportedly holds positions anywhere from two to five years. [1]

According to Institutional Investor's Alpha, Steyer considers "himself as a research-oriented fundamental investor, not a trader." [1]

Farallon also practices "event driven" international investing, finding distressed international companies and helping the businesses restructure. [12] [13] [14] In 1999, Farallon bought a direct stake in an Argentine shoe company, which helped stabilize profitability as Argentina recovered from an economic crisis. [15]

In 2002, Farallon bought control of Bank Central Asia (BCA), an Indonesian financial institution, for $531 million. [16] At the time, many of Indonesia's banks were on the verge of collapse because of bad loans made during President Suharto's term and the country was seen as dangerous for foreign investment. [16] Over the next four years, Farallon installed a new chairman and made necessary reforms.[ citation needed ] Farallon sold its stake for a profit in 2006. [17]

In the year before Farallon's investment in Indonesia, $286 million flowed into the country as foreign direct investment. After Farallon exited, that number grew to $1 billion in 2007 and $4 billion in 2008. [1] [8]

In March 2010, Farallon announced plans to refocus its investing on risk arbitrage and credit wagers and lessen its equity exposure. In addition, the firm said it would disclose more information to clients to "foster a more open culture at the hedge fund." [18]

Investment vehicles

Farallon Capital Institutional Partners: for Farallon's institutional investors to invest in. [19]

Investment history

In 2007, Farallon in partnership with Simon Property Group and other hedge funds purchased Mills Corp, a real estate investment trust. [20]

The fund is one of the largest shareholders in Japanese electronics company Toshiba, with a stake of more than 6 percent. [21] Farallon is also one of the top-10 shareholders in Acceleron Pharma. [22]

Company

In 2006 it was reported that Farallon Capital was the largest hedge fund in the world in 2005. [23] Steyer named the firm after the Farallon Islands off the coast of the San Francisco Bay Area. [5]

Structure

Andrew J.M. Spokes acts as the firm's Managing Partner. Spokes was promoted to the position in 2012 when Steyer separated from the firm. [24] [25] Prior to his promotion, Spokes oversaw portfolio management and strategy for Farallon exclusive subadviser Noonday Global Management. [26] Spokes opened Farallon's first international office in London in 1998. [1]

Farallon retains talent by allowing enterprising professionals to spin-off and run new funds with Farallon capital. For example, former Farallon traders started Noonday Global Management and ChinaRock Capital using Farallon money and back office support. [5]

Today, Farallon has 21 principals, 13 managing directors and 35 investment professionals who oversee the firm's day-to-day operations and management. [4]

Offices

Farallon operates its offices in San Francisco, São Paulo, Tokyo, Singapore, London, Hong Kong. [4]

See also

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References

  1. 1 2 3 4 5 6 7 Adamson, Loch (23 February 2005). "Steyer Power". Institutional Investor. Archived from the original on 3 September 2012. Retrieved 19 August 2010.
  2. ↑ Adam Zoia; Aaron Finkel (28 January 2008). Getting a job in hedge funds: an inside look at how funds hire. John Wiley and Sons. pp. 2–. ISBN   978-0-470-22648-3 . Retrieved 31 July 2011.
  3. ↑ "Farallon Homepage" . No. Homepage. United States: Farallon Capital. Farallon Capital. 13 October 2022. Retrieved 13 October 2022.
  4. 1 2 3 4 "Farallon Website".
  5. 1 2 3 4 Lashinsky, Adam (17 September 2008). "California's hedge fund king". Fortune. Archived from the original on 31 January 2011. Retrieved 23 July 2010.
  6. ↑ "FARALLON CAPITAL MANAGEMENT, L.L.C. Website". www.faralloncapital.com. Retrieved 2022-10-13.
  7. ↑ Robinson, Edward (9 July 2019). "Tom Steyer Made $3 Billion in Markets, Now Wants Crack at Trump". Bloomberg. Retrieved 2020-08-21.
  8. 1 2 3 Mallaby, Sebastian (2010). More Money Than God. Penguin Press.
  9. 1 2 Fabrikant, Geraldine (2007-02-18). "For Yale's Money Man, a Higher Calling". The New York Times. Retrieved 2010-07-26.
  10. ↑ Lashinsky, Adam (22 September 2008). "Hedge fund VIP Thomas Steyer of Farallon hates to lose money - Sep. 22, 2008". CNN. Retrieved 2020-08-21.
  11. ↑ Keoun, Bradley (21 March 2007). "Farallon Discloses Takeover Talks With Accredited". Bloomberg. Archived from the original on 6 November 2012. Retrieved 31 July 2011.
  12. ↑ Saltwell, Hollie. "M&A Plays the Trump card: making event driven hedge fund investing great again?". Aurum. Retrieved 2021-06-06.
  13. ↑ "Asset Manager Profiles". studylib.net. Retrieved 2021-06-06.
  14. ↑ "Andrew Spokes, the New Face of Farallon". Institutional Investor. Retrieved 2021-06-06.
  15. ↑ "Today's fund is a pioneer in the hedge fund sector, Uniform Accounting shows the fund hasn't lost its touch". Valens Research. Retrieved 2021-06-06.
  16. 1 2 McMillan, Alex (20 March 2002). "CNN.com - 'Masters of the universe' behind BCA sale - March 20, 2002". CNN. Retrieved 2020-08-21.
  17. ↑ Or, Amy (2009-06-29). "Farallon Sells Its Entire Stake in Indonesia Bank". Wall Street Journal. ISSN   0099-9660 . Retrieved 2020-08-21.
  18. ↑ Sorkin, Andrew (2010-03-12). "Farallon Plans Shake-Up, Report Says". The New York Times. Retrieved 2010-07-26.
  19. ↑ Williamson, Christine (December 27, 2010). "Farallon receives mixed messages". Pensions & Investments. Retrieved 31 July 2011.
  20. ↑ Stephen Todd Walker (7 January 2011). Wave Theory for Alternative Investments: Riding the Wave with Hedge Funds, Commodities, and Venture Capital. McGraw-Hill Professional. pp. 365–. ISBN   978-0-07-174286-3 . Retrieved 2 August 2011.
  21. ↑ "Major Toshiba shareholder Farallon calls on it to solicit buy-out offers". Reuters. 2022-03-11. Retrieved 2022-05-06.
  22. ↑ "Farallon Capital Opposes Terms of Merck's Acceleron Takeover". Bloomberg.com. 2021-11-02. Retrieved 2022-05-06.
  23. ↑ "Goldman Sachs Leads Hedge Fund Management Rankings" (PDF). Wall Street Letter. 26 June 2006. Retrieved 6 August 2011.[ permanent dead link ]
  24. ↑ Kishan, Saijel (2012-10-22). "Farallon's Steyer to Step Down as Spokes Named Manager". Bloomberg. Retrieved 2018-11-15.
  25. ↑ Lattman, Michael J. de la Merced and Peter (22 October 2012). "Farallon Capital's Founder to Step Down This Year". DealBook. The New York Times. Retrieved 2018-11-16.
  26. ↑ Strasburg, Jenny. "Farallon Names Spokes Co-Managing Partner with Steyer". Bloomberg. Retrieved 2010-07-26.
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