CNN Money – Growing companies could be tapping into a new source of capital in 2007: Hedge funds are getting into the private-equity business. And although some are investing in large venture capitalor similar institutional funds, other managers are hitting the VC breakfast circuit in search of direct investments.
Hedge fund Managers have always had the freedom to invest 10 percent of their fund, known as a “side pocket,” in illiquid assets. Traditionally they’ve chosen real estate or big energy companies. But lately they’ve been looking at more creative outlets, including small growth businesses.
“This is money directly going to companies,” says Russell Tencer, managing partner at the Parker Boston Group (parkerboston.com), a consulting firm that has played matchmaker for half a dozen such deals in the past year. “We found that around half our contacts in the hedge fund world were willing to consider making a private-equity investment.”
