International Investment and Underwriting (IIU), based in the IFSC and chaired by Mr Dermot Desmond, plans to enter the hedge fund market.
Mr David Morrison - a former partner at Goldman Sachs, the US merchant bank - has been appointed IIU's chief executive officer with a brief to create a global macro hedge fund.
Mr Morrison was the European chairman of Tiger Management, one of the largest hedge fund managers until its restructuring earlier this year by its founder, Mr Julian Robertson.
IIU expects the new fund to exceed $1 billion (€1.17 billion) within two years, much of it raised from third parties. Hedge fund managers normally charge a fee and take a share of the profits.
"This is our first move in the hedge fund market and we intended to move with someone of the calibre of David. We are in the process of building a team around him," said IIU director Mr Nigel McDermott yesterday.
IIU plans to create other funds. "It is our intention to provide products where there is demand right across the spectrum," said Mr McDermott.
Earlier this year, Mr George Soros said he would restructure his hedge fund business, including its flagship $8 billion Quantum fund, following a run of poor investments blamed on volatile and unpredictable markets. Macro hedge funds such as the one planned by IIU take large positions in stocks, currencies, and bonds, hoping to profit from significant movements. Some funds, such as the ill-fated Long-Term Capital Management, are highly leveraged, which can lead to dire consequences when investments go wrong. For example, in the case of LTCM in 1998, the US authorities had to rescue the manager, who had borrowed millions from banks across the globe.
As the large funds have been winding down there has been an associated increase in the number of smaller funds such as that planned by IIU.
