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Greg Coffey, the Australian hedge fund star once nicknamed the “Wizard of Oz”, is in talks to acquire emerging market investor Emso in a deal that would create a $13bn firm.
Kirkoswald, the firm Coffey started in 2018 after coming out of retirement and which now manages $8bn, is in talks to buy London-based Emso, according to a person familiar with the matter. A fixed income specialist, Emso runs about $5bn in assets across emerging markets.
If a deal is agreed, Coffey will be both chief executive officer and chief investment officer of the combined group while Mark Franklin, Emso CIO, will chair the Emso business and be vice-chair of the combined board, the person said.
Kirkoswald’s president Joe Mauro, a former Goldman Sachs partner, would be president of the combined entity.
“Kirkoswald is trying to build the leading emerging market and macro investing platform,” the person said.
The financial terms of the potential deal, which was first reported by Bloomberg, were not disclosed.
Kirkoswald and Emso declined to comment.
Coffey’s run of stellar returns in the years before the global financial crisis and subsequent struggle before he founded Kirkoswald epitomises how rapidly fortunes can change in the hedge fund industry.
He built his reputation and fortune at hedge fund manager GLG Partners, now part of UK-listed asset manager Man Group, and outperformed both financial markets and rival hedge funds in the 2005-2007 bull market.
But he resigned from GLG as his returns were starting to go down, and joined Louis Bacon’s hedge fund Moore Capital Management in 2008. During his time at Moore, Coffey’s performance failed to match his record at GLG.
In 2012, Coffey retired from Moore, saying that he wanted to spend more time with his family in his native Australia.
Kirkoswald’s negotiations with Emso comes as investment groups are seeking greater scale at a time when higher regulatory costs and pressure on fees are eroding margins.
Two years ago, Emso examined whether to buy Somerset Capital Management, the emerging markets boutique co-founded by Conservative MP Sir Jacob Rees-Mogg. But the talks came to nothing and in December Somerset announced it was winding down after large client redemptions made the business unsustainable.
