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Global Prime Partners (GPP) has launched the first introducing prime brokerage service in Europe, providing clearing, custody, securities lending and financing services for emerging hedge funds.
The services will be provided through correspondent relationships with Jefferies, KAS Bank and Nomura.
GPP's prime brokerage business is led by Kevin LoPrimo. He joined from hedge fund G2 Group in November 2009 and was previously an executive in the prime brokerage divisions of Merrill Lynch and Goldman Sachs where he spent nearly 20 years.
London-based GPP has been providing clearing services for individual traders and start-up hedge funds since it launched two years ago. LoPrimo has spearheaded the introduction of stock lending and financing services and enhanced GPP's trade execution capabilities since he joined.
GPP will focus on start-up hedge funds and emerging managers with under $100 million in assets.
"This segment of the market is underserved by the bulge bracket banks but is a sizeable opportunity for GPP. There is less capital flowing into hedge funds than a few years ago and a lot of managers are launching with $5-$25 million in assets. We can help them get up and running at a much lower cost and provide a higher level of service than the big banks," said LoPrimo.
GPP plans to have a capital introduction team in place in the near future to help clients raise assets, he added.
GPP has also entered into a partnership with OliveTree Securities, the equities brokerage established in April 2009 by former Morgan Stanley executive Daryn Kutner.
"We have a number of hedge fund clients that are either looking for a second prime broker or an alternative provider. GPP offers a service that specifically addresses the needs of these clients," said Emmanuel Bousquet, head of sector strategy at OliveTree.
The partnership means GPP's clients will also have access to OliveTree's research and brokerage services.
LoPrimo said GPP planned to enter into "a series of strategic partnerships with specialists", as it looks to expand its business.
Introducing primes like GPP have become a fixture of the US hedge fund business over the past five years. Companies like Merlin Securities and BTIG have built a strong following among small and mid-size hedge funds, which have historically been underserved by the bulge bracket banks.
Cantor Fitzgerald and Lazard have also recently established prime brokerage units targeting smaller hedge funds.
European regulations have complicated efforts to replicate the "mini-prime" model in Europe. Merlin Securities planned to open a London office earlier this year but has since abandoned those plans, opting instead to expand in Canada and Latin America. "The regulations in Europe do make it more difficult to get this business up and running, but through our clearing banks we have been able to find a model that works," said LoPrimo.
