Ex-BlackRock Executive Seeks $700 Million for Credit Hedge Fund

(Bloomberg) — Neeraj Seth, a former chief investment officer at BlackRock Inc.’s Asia Pacific fundamental fixed income team, is looking to raise up to $700 million for a credit hedge fund, aiming to break into a niche where few independent players operate.

3R Investment Management will invest up to 80% in long-short strategy in corporate bonds and loans in Asia Pacific and the Middle East, as well as event-driven opportunities, Seth said in an interview. The fund, which is seeking to raise the money over three years, will target low to mid-teens returns and also invest in private credit deals.

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Interest in Asian credit hedge funds has grown steadily in recent years, with firms such as Arkkan Capital Management and PAG raising hundreds of millions of dollars to target distressed credit opportunities in China’s property sector. However, widespread property bond defaults have left some funds grappling with heavy losses.

Credit spreads are the tightest in decades, further adding to challenges for any new entrants. “As central banks continue to ease policy and with most of China’s real estate pain behind us, Asia-Pacific credit markets have the potential to start attracting flows. This is a powerful shift,” said Seth, who had a 16-year stint at the world’s largest asset manager. He was previously BlackRock’s head of Asian credit and led the investment firm’s Asia-focused public and private funds.

“Global investors are now seeking diversification, and the APAC region is well positioned to attract capital again and become an attractive source of returns,” said Seth.

Goldman Sachs said in its 2024 hedge fund industry outlook report, that asset allocators remained more interested in hedge funds investing in credit than in any other hedge fund strategy, for the second consecutive year.

3R will be mainly backed by family offices based in Singapore, London and US, Seth said. While discussions with investors are taking place, the firm will also get funding from its founder and board of advisers including Rohit Bhagat, a former chairman of BlackRock Asia Pacific and Shyam Maheshwari, co-founder of private credit fund SSG Capital Management that was acquired by Ares Management Corp in 2020.

—With assistance from Bei Hu and Trista Xinyi Luo.