Convergence Capital to launch first hedge fund

Convergence Capital, a newly formed hedge fund manager focused on Central and Eastern Europe and Russia, will go live with its first long/short equity fund Constar (Convergence strategic absolute return fund), in the next two to three weeks. The fund, based in London, has been set up in partnership with investment banking boutique Williams de Broë and will be run by James Oates and Nicholas Vardy.

Constar will be one of a handful of hedge funds focusing on the 10 EU accession states, whose applications for membership were effectively approved by the ratification of the Nice Treaty by Ireland in October this year. The fund will target both retail and institutional investors and will cap at $100 million.

Oates told RiskNews that he sees good opportunities in the Eastern European countries, particularly Estonia, Poland, and Russia.

“Estonia has one of the most radically reformed economies in the region, with a flat tax and a rock hard currency,” Oates said. “Poland has underperformed for a long time, and we see good value in Russian oil.”

Oates was previously a market strategist at Lazard Brothers, and is currently a special adviser to the deputy Prime Minister of Bulgaria. He also ran a $600 million long fund at Fleming Investment Management. Vardy was previously at London-based fund manager Henderson Investors on the emerging markets team, and has also run an alternative investment vehicle at Creditanstalt Asset Management in Hungary. Vardy also developed Convergence Capital’s proprietary risk and money management system, Terra, with members of the department of computing and Institute for Quantitative Finance at Imperial College, University of London.

The fund initially expects to launch with upwards of $12 million under management.