Bobby Jain’s new hedge fund plans major push into commodities

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(Bloomberg) — Bobby Jain’s new hedge fund is tapping talent from commodity trading houses and committing a chunk of the money it’s raising for a major push into raw materials – including in the physical market.

Jain Global will allocate to commodities 15% to 20% of the roughly $5 billion it’s aiming to raise, according to a person familiar with the matter, who asked not to be identified because the details are private. The fund – due to launch in July – will trade commodities derivatives before moving into physical transactions.

Jain Global is on track to be one of the biggest hedge fund launches in years, and its push into energy and metals is the latest example of how investors are piling back into raw materials. A gauge of prices has rallied to the highest in a year, driven by supply disruptions, geopolitical tensions and a bid to hedge against higher-for-longer inflation.

The hedge fund’s commodities aim is another example of how big multistrategy firms are looking to replicate the success of Citadel in building out commodity-trading businesses with exposure to physical markets. Jain’s foray into the sector is being led by former Macquarie Group Ltd. veteran David Hochberg, with about 10 commodities portfolio managers hired so far. It plans to start with gas and power in North America and Europe, before expanding into other commodities and regions, the person said.

Funds have been particularly attracted to storage and physical arbitrage opportunities in gas and power markets, with the growth in renewable power sources, climate change and Europe’s new reliance on imported liquefied natural gas making big price moves more common.

Hiring Spree

Bloomberg reported earlier this year that Jain hired Hochberg, who previously worked with Sebastian Barrack, now at Citadel.

Other hires include Paul Smith and Christian Allen, who are joining from trading house Hartree Partners LP for North American gas, according to the person familiar. Herb Petry, recently of Sumitomo Corp. affiliate Pacific Summit Energy, will also focus on North American gas, the person said.

Dominic Magnabosco is joining from Citigroup Inc. for North American power, while Jason Greenberg is joining from BlueCrest Capital Management for European gas, the person said. In Asia, Anurag Nema is coming from BNP Paribas SA to cover metals, the person said. Jain has also hired Amir Ravan, a former senior trader specializing in precious metals at BlueCrest, Bloomberg has reported.

Physical trading requires specialists to manage risks involved in moving commodities around the world. Sopong Kim, who spent more than a decade at Hartree and was most recently head of risk management there, is also joining Jain, according to people familiar with the matter.