(Bloomberg) -- Former Millennium Management portfolio manager Diego Megia’s new hedge fund is setting up an office in Italy, joining peers seeking to take advantage of the tax incentives offered by the European country.  

Taula Capital Management, which already has established its footprint in London, New York, Dubai and Jersey, is opening a new trading outpost in Milan, people familiar with the move said, asking not to be identified discussing internal matters.

A representative for Taula Capital declined to comment. 

The hedge fund, which is due to kick off operations this quarter, is expected to start with as much as $5 billion in capital, of which $3 billion will come from Izzy Englander’s multistrategy giant Millennium, Bloomberg News has reported previously.

Italy has grown in attractiveness for both foreigners and its own nationals, offering generous tax breaks including a €100,000 ($106,550) flat tax on income earned abroad. Milan in particular has emerged as the hub of choice for many financial firms, attracting hedge funds Point72 Asset Management and Capstone Investment Advisors just this year.

Megia, who specializes in relative value rates trading, is among a slew of money managers leaving well-established hedge funds to start their own operations. He is taking members from his investment team at Millennium with him and also hiring outsiders ahead of Taula’s imminent launch. The startup fund recently recruited Ilana Kaufman from Bank of America Corp. as a fixed income portfolio manager. 

Backing spinouts is an increasingly popular way for multistrategy hedge funds — which deploy several teams of traders across various strategies — to farm out investments as their assets swell. Meanwhile, money managers striking out on their own get access to fresh cash even as fund-raising conditions remain tight.

Read more: Hedge Fund Startups on the Rise With Giant Firms Under Scrutiny

--With assistance from Antonio Vanuzzo and Nishant Kumar.

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