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Ken Griffin’s Citadel to reopen Tokyo office this year

Ken Griffin’s hedge fund Citadel plans to reopen its Tokyo workplace later this yr, nearly a decade and a half after shutting down its Japan operations through the international monetary disaster.

The hedge fund, which manages $54bn in property, is making use of for licences to function in Japan’s markets and expects to achieve approvals earlier than the top of this yr, based on three folks accustomed to the matter.

The enlargement by Citadel, among the many world’s greatest hedge funds by property beneath administration, comes as others buyers together with the activist fund Elliott have been rising their Japan-focused groups.

Managers at greater than a dozen hedge funds and personal fairness teams mentioned buyers had been focusing on Japan, the place greater than half of all listed shares commerce under ebook worth, in expectation of unlocking returns.

One of many folks accustomed to the state of affairs mentioned Citadel was ready to obtain its licence following the opening of an workplace for affiliate Citadel Securities in Tokyo.

“It comes again to expertise,” mentioned one particular person with direct data of the agency’s pondering. “There’s sufficient expertise that desires to be based mostly in Japan now.”

Citadel declined to remark.

The surge of world curiosity in Japanese securities displays a stark turnround from the state of the nation’s markets when Citadel closed its operations in Tokyo greater than 14 years in the past through the depths of the worldwide monetary disaster.

The hedge fund shuttered its 12-person Tokyo workplace in late 2008 as a part of wider cuts that included dissolving its principal investments staff in Asia and slashing 25 positions in Hong Kong, which then turned the corporate’s sole base of operations for the area.

Citadel suffered badly through the monetary disaster however has gone on to publish returns effectively forward of its friends.

Final yr it delivered $16bn in revenue to buyers — the biggest ever annual acquire by a hedge fund — on the again of bumper returns from the agency’s vitality buying and selling and commodities operation.

Japan’s massive and liquid market was an element behind Citadel’s choice to reopen in Tokyo, mentioned one other particular person accustomed to the agency’s plans.

Nicholas Smith, Japan strategist at CLSA, mentioned the arrival of recent buyers and return of others to Japan made sense. He mentioned Tokyo shares had earnings per share development over the previous decade that outstripped the US S&P 500 index, however principally sagging valuations.

“Stability sheets are an Aladdin’s cave of extra property — it’s open season for activism and the mandarins are lastly, unequivocally on board,” mentioned Smith, referring to the rising ranges of official assist for governance enhancements and better company concentrate on shareholder pursuits.