Blackstone’s hedge fund business to launch growth strategy

Blackstone’s main hedge fund fund had lost some of the rich returns from growth investment in recent years because its conservative, low-volatility approach aims to protect clients’ portfolios. In January, Blackstone hired former Brown University fund chief Joe Dowling to manage its hedge fund business with John McCormick, saying at the time that his hiring signaled a new focus on hedge funds as vehicles that can generate large returns and withstand volatility.

Mr. Bommer, 54, is Mr. Dowling’s first hire. The private equity firm has been pushing to invest more in fast-growing companies and recently acquired stakes in the owner of the dating app Bumble and Swedish oat milk maker Oatly AB.

“There is a great opportunity with the disruption that is taking place, as technology now permeates all of these different sectors,” said Bommer, who previously headed SAB Capital Management based in New York for 17 years before closing it in 2015 to manage your own money.

Mr. Bommer is in charge of forming a team for Horizon. Blackstone said eight managers have already been selected for the platform, two of whom are women, a high proportion in a sector dominated by men.

Bommer said Blackstone’s deep partnerships with hedge fund managers will help access key investors and their best ideas for co-investing in private companies about to go public, a model employed by Dowling at Brown. Bommer said that these businesses would benefit from “almost a double layer of verification” by managers and Blackstone.

He also expressed interest in PIPE’s business – private investments in public shares – in companies that are going public through blank check companies. Horizon can also snap up shares in companies that went public recently when first investors’ blocks expire, or be a key investor in companies that make a direct listing. Direct listings are an increasingly popular way for companies to go public, which bypasses the traditional initial public offering process.

“I can’t think of anyone who is better at evaluating, underwriting and then evaluating both risk and reward,” said Dowling of Bommer, a friend since business school in the 1990s.

“He had thousands and thousands of repetitions [repetitions] across all sectors and asset classes and that’s what you need to be really good at, ”said Dowling.

During his time at SAB, Mr. Bommer invested extensively in comparatively cheap public companies as a value investor and also invested in special situations. He saw SAB reach a height of $ 2 billion.

Although it underperformed its rivals in the end, the SAB surpassed the total return on the S&P 500 by more than 7% on an annualized basis over its lifetime, with less risk, according to an investor document seen by the The Wall Street Journal.

Mr. Bommer has focused on growth in the final stage, investing with his personal assets since he closed SAB, while continuing to invest in public markets. He was a seed investor in the Latin American delivery startup Rappi Inc. when it was valued at about $ 20 million. Its most recent round, in September, valued the company at $ 4.3 billion post-cash.

Keeping a low profile as a hedge fund manager, Bommer attracted attention for his real estate transactions. He and his wife, Donya, spent $ 93.9 million on three adjacent lots in East Hampton, which they sold in 2016 for $ 110 million. The Bommers in 2008 set records at the time for buying and selling cooperative apartments in New York City.

Write to Juliet Chung at [email protected]