(Bloomberg) -- Izzy Englander’s Millennium Management is looking to raise between $7 billion and $10 billion of new capital in a structure aimed at giving the hedge fund firm a more permanent source of capital.
Millennium has, like many of its peers, been moving to lock up client cash for longer. The firm, which now manages about $69 billion, has more recently taken a page from private equity firms and started raising money that’s callable — rather than taking it in all at once like most hedge funds.
A spokesperson for the firm declined to comment.
With this new iteration, clients will make pledges that Millennium can tap over time. As the firm makes use of funds, new commitments would replenish the pool. When capital is tapped, everyone in the queue would participate, though the firm would take more money from investors who pledged cash the earliest.
This form of fundraising will give Millennium access to liquidity when it needs it, and the firm won’t have to hold a cash cushion that could weigh on returns.
Millennium’s plan also takes some uncertainty out of money raising. Currently, if the firm doesn’t use all of its callable capital within three years, the client pledges expire. While the commitments will no longer expire, investors will have the option of gradually reducing them after two years.
Millennium and its peers see more-stable capital as key to attracting and retaining investment talent. It’s also another way for the firm to avoid a rush of withdrawals when markets whipsaw. Millennium already has some guardrails against an exodus — investors can withdraw only 5% each quarter, extending the full redemption period to five years.
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