Serono family dynasty buys hedge fund investor Alpha Strategic

The European family enriched by its former ownership of pharmaceutical giant Serono is buying a controlling stake in listed hedge fund investor Alpha Strategic, reflecting wealthy individuals’ continued willingness to take interests in the alternatives industry.

The news of the Swiss family’s forthcoming acquisition, via placement of 4.7m shares generating about £2.5m for Alpha Strategic, stands in contrast to some institutional investors reconsidering interests in hedge fund activities.

Subject to approvals, the Bertarellis’ Northill Europe Holdings vehicle, incorporated in Luxembourg, will buy a 51% stake in Alpha Strategic, quoted on London’s Alternative Investment Market.

Alpha Strategic will use the cash for further interests in revenue streams, but not equity stakes, of hedge fund businesses.

Alpha Strategic was founded by Nicola Meaden and floated in 2005, taking interests in revenue streams of products at Winton Capital Management and IKOS Asset Management, using both cash and its own shares.

Meaden said: “The attraction of working with Northill was the founders have a phenomenal amount of expertise in the fund management area and in M&A in the space. We will have access to a nice war chest with which to do great deals with managers.”

Jonathan Little, Northill’s founder, will become a non-executive director of Alpha Strategic. Meaden said Alpha Strategic appealed to “smart investors such as family offices, looking for effective ways to put capital to work in the hedge fund space”.

Fund managers appreciated the fact Alpha Strategic did not take voting shares in their companies, but cash received through deals allowed them to expand operations or buy back stakes from founding shareholders wanting to encash their business stakes, she added.

The Bertarellis began their professional activities in Italy before moving to Switzerland.

They were majority shareholders of Serono, founded in Rome in 1906. Under them it became the world’s third largest, and Europe’s largest biotechnology company. It was bought by Germany’s Merck in 2007.

The Bertarellis’ willingness to become more involved in the hedge fund industry via Alpha Strategic contrasts with banks such as Morgan Stanley, which said late last year it was evaluating its stakes in hedge fund businesses.

US regulations limit to small proportions of Tier One capital how much bank holding companies can commit to proprietary trading and stakes in hedge fund firms.

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