Taconic Capital Advisors is in the process of raising money for a new co-investment vehicle.
The New York hedge fund firm has so far brought in $49 million for the Taconic Sidecar Fund III, the domestic piece of the deal, and $24.7 million for the offshore fund, according to regulatory filings.
As the Roman numeral suggests, this is the firm’s third co-investment fund designed to capitalize on specific opportunities that have reached capacity in Taconic’s main funds.
It is also the second sidecar that Taconic has created this year alone.
Earlier this year, Taconic raised about $175 million in commitments for the Taconic Sidecar Fund II. At that time, it had also raised about $200 million in commitments for the Taconic CRE Dislocation Onshore Fund and its offshore counterpart. They were designed to take advantage of loans soon coming due within commercial mortgage-backed securities.
Taconic generally charges investors in its sidecars a 0.25 percent management fee and 20 percent performance fee, with an 8 percent preferred return, or hurdle. They are also commitment-style funds, meaning the investor doesn’t hand over the dough until Taconic is ready to invest it.
Taconic was founded by Frank Brosens and Kenneth Brody in 1999. They both previously worked at Goldman Sachs, where Brosens was a partner and once served as head of risk arbitrage and Brody was a general partner and member of the management committee.
Brody retired from Taconic at the beginning of 2014. He resurfaced earlier this summer when it was reported he had created a new money management firm, Sutton Square Partners, according to Reuters.
Taconic manages $6 billion, down from $7.1 billion at the beginning of the year and $9.1 billion as of July 1, 2014.
Like many hedge fund firms, Taconic has suffered redemptions due to mediocre performance. Last year the Taconic Opportunity Fund fell 1.7 percent in its onshore version and 2.1 percent in its offshore counterpart. They are event-driven, multistrategy funds. The much smaller event-driven funds — Taconic Capital Partners 1.5 and Taconic Offshore Fund 1.5 — returned 0.5 percent and 0.33 percent, respectively, last year.
The funds have fared much better this year, however. Through mid-December, Taconic Opportunity had gained 8.5 percent for the year, while the smaller event-driven funds had returned 9.5 percent.
At the end of the third quarter, Taconic’s largest U.S. long equity positions were in convertible securities of American Realty Investors, a real estate company, and Sina Corp., a Chinese online media company. Its largest common stock holding was Ally Financial, the online bank and successor to the old GMAC.
Taconic launched its first Sidecar fund in February 2013 in an attempt to capitalize on investment opportunities created by the financial crisis in trade claims of Icelandic banks. In August 2014, Taconic launched the Taconic European Credit Dislocation Funds, which were designed to capitalize on illiquid credit opportunities arising from the economic and financial crises in Europe, particularly in Spain, where Taconic felt it had a sourcing edge, the firm told clients in its second-quarter 2014 letter, which was obtained by Alpha at the time. The two funds also were capital commitment funds with set investment and harvest periods.
