Everyone desires a Rumpelstiltskin of their lives, spinning straw into gold. So when Softbank Group Corp’s Rajeev Misra comes knocking in your door wanting for a couple of billion {dollars}, you’re in luck.
The former Deutsche Bank credit score dealer, who was instrumental in build up the $100 billion Vision Fund, is stepping again from his predominant roles at SoftBank. Instead, Misra is launching his personal enterprise, securing greater than $6 billion from the likes of Abu Dhabi sovereign wealth funds Mubadala, ADQ and conglomerate Royal Group.
Details of the fund’s construction and funding mandate are sparse. But its dimension and the pace with which Misra raised this capital is shocking in an period the place liquidity is tight from central banks’ quantitative tapering and buyers are jittery.
Prompting much more head-scratching is that Misra doesn’t have a stellar funding observe file. As CEO of SoftBank Investment Advisors, which managed the primary Vision Fund, he oversaw a titanic operation that reported solely $30.8 billion funding positive aspects as of March-end. Saddled by poor funding selections from WeWork Inc. to Greensill Bank AG, the efficiency of the $100 billion enterprise fund, which launched in 2017, is much from spectacular in an funding world that goals for at the least 20% returns yearly.
Misra is reportedly recruiting his previous teammates, together with Akshay Naheta, a former colleague at Deutsche in addition to SoftBank. For years, the 2 pushed SoftBank founder Masayoshi Son to allow them to arrange an inside multibillion-dollar hedge fund to do complicated public market offers. When SB Northstar was established in 2020 — led by Naheta who oversaw inventory investments — it rapidly earned SoftBank the “Nasdaq whale” nickname. But with tech shares crashing, Northstar hammered SoftBank with 670 billion yen ($4.8 billion) in losses for the final fiscal yr ending March, whereas Son personally took a $2.4 billion hit. In different phrases, Misra and his long-time colleagues should not have a lot of a observe file in public markets, both. SoftBank declined Bloomberg Opinion’s request to make Misra obtainable for an interview.
So what do coveted and deep-pocketed buyers similar to Mubadala see in him?
One attainable clarification is that Misra is fascinating, and his distinctive lens can yield sudden returns. As rising macro dangers and volatility gas will increase in pairwise fairness correlations, it’s getting more durable for conventional inventory pickers to outperform. Some top-tier buyers are in search of contemporary concepts exterior the crowded sphere of public market fundamentals and nearer to personal, opaque markets.
Look at Misra’s background, and it’s obvious that vanilla investments have been by no means his factor. Rather, he stays a real credit score dealer: Originate danger on his stability sheet, however shift it rapidly to a different investor at higher costs, which covers charges and different prices. In doing so, he retains the upside, whereas eradicating the precept danger from his personal portfolio.
Misra’s Wirecard play was a wonderful instance. In April 2019, SoftBank facilitated a 900 million euro ($912.6 million) convertible bond for the Germany digital funds agency, a refreshing stamp of approval for a corporation that had confronted scrutiny over its accounting for years. This convertible bond was first bought to Mubadala and some SoftBank executives, together with Misra and Naheta, at beneficiant costs after which instantly re-packaged and re-sold by Credit Suisse Group AG to a broader group of buyers at considerably much less engaging phrases. Mubadala et al ended up getting some Wirecard stakes — risk-free and for nothing — from this so-called “structured equity” commerce.
In different phrases, corporations like Mubadala in all probability by no means anticipated basic analysis from Misra, whose bread-and-butter technique has all the time been quick time period. And who is aware of, maybe his intelligent buying and selling concepts will work on this setting, the place unstable macro elements wreck vanilla funding methods.
Misra’s spectacular fundraising ought to thus function a lesson for hedge fund managers. These days, you don’t should be good, however you do have to be fascinating.
More From Bloomberg Opinion:
• Wirecard Is a Wild Card, Even Without SoftBank Money: Shuli Ren
• Venture Capital Has a Battery Blind Spot: Anjani Trivedi
• Tiger and Sequoia Take SoftBank to the Cleaners: Shuli Ren
This column doesn’t essentially replicate the opinion of the editorial board or Bloomberg LP and its house owners.
Shuli Ren is a Bloomberg Opinion columnist masking Asian markets. A former funding banker, she was a markets reporter for Barron’s. She is a CFA charterholder.
Anjani Trivedi is a Bloomberg Opinion columnist masking industrial corporations in Asia. Previously, she was a reporter for the Wall Street Journal.
