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Millennium Management, one of the world’s largest hedge funds, is talking with Goldman Sachs’ Petershill Partners to identify potential buyers for a minority equity stake in Millennium’s management company, according to two people familiar with the situation.
Buyers could include some of Millennium’s largest investors, the people added. Petershill, which is operated by Goldman, buys minority stakes in hedge funds and private equity firms. One of the people cautioned that Millennium might ultimately decide not to work with Petershill.
Millennium and Petershill declined to comment.
The move comes as Millennium’s founder Izzy Englander and president and chief operating officer Ajay Nagpal have been looking for ways to
institutionalise the business to prepare it for life beyond its
septuagenarian founder. Englander has kept sole ownership of
Millennium for its 36-year history.
Alongside the Petershill talks, Millennium was working on a plan to
open up the ownership of the management company to its top executives
for the first time by distributing equity to its key people, the
Financial Times reported earlier this year. It is also in
discussions with BlackRock about a strategic partnership that could
lead to the world’s largest asset manager taking a small equity stake
in the hedge fund’s management company.
Millennium, with $73bn under management, is one of the world’s top-performing hedge funds with more than 330 trading teams across assets including equities, commodities and bonds, investing within a tight risk framework. The firm has more than 6,200 employees globally, competing with the likes of Ken Griffin’s Citadel and Steve Cohen’s Point72.
Englander has shown no signs he is planning to step back and is still
crucial to decision-making. But the Millennium founder wrote in his
annual investor letter in February: “What we’ve built is larger than
any one person, and it’s designed to endure and thrive.”
In recent years Englander has established a trustee advisory board;
built out its leadership team, notably with a series of senior hires
from Goldman Sachs; and explored diversifying the business with new
strategies.
Led by chief marketing officer John Novogratz, Millennium has also
secured its capital base by moving the vast majority of investors into
a five-year share class. The flagship fund’s terms were adjusted so investors no longer have a special option to redeem if something
happens to Englander.
In 2022 Millennium changed its fee structure so investors were required
to pay a minimum fee regardless of the fund’s performance, and on top
of expenses. Investors now pay annual fees of about 1 per cent of
assets or 20 per cent of investment gains, something bankers described
as akin to a management fee.
They said such predictable revenues were easier to model and value
than volatile performance fees, and suggested the move could pave
the way for a sale of a minority stake in the business or the
distribution of equity among senior management.
Millennium’s flagship fund gained 15.1 per cent last year and is down 1.35
per cent this year through April, investors said. It has recorded
annualised gains of about 14 per cent since inception.
