Brevan Howard Continues Digital-Asset Push With Crypto Fund Takeover

Muyao Shen, Bloomberg News

The office building at 55 Baker Street, housing the offices of Brevan Howard Asset Management LP, in London, U.K., on Monday, Aug. 23, 2021. Famed investment firm Brevan Howard, which as recently as mid-2019 was struggling to stem an unprecedented client exodus, shut its flagship fund to investors earlier this year. Photographer: Jason Alden/Bloomberg , Bloomberg

(Bloomberg) -- Brevan Howard Asset Management is taking over a long-short hedge fund run by Dragonfly Capital, a crypto investment firm, in the latest sign of its push into digital assets.

The Jersey, Channel Islands-based firm that has some $30 billion in assets under management has entered into an agreement to assume an actively-manged Dragonfly fund, according to people familiar with the matter who asked not be named because they weren’t authorized to share information about the transaction.

The Liquid Opportunities fund was founded in June 2021 and managed by Kevin Hu, Ashwin Ramachandran and Lawrence Diao. The fund will now operate as part of Brevan Howard Digital, the investment firm’s crypto and digital assets division. The long-short trading strategy used by the fund is in line with BH Digital’s active trading approach, one of the people familiar with the matter said.

Hu’s LinkedIn profile describes his current role as Chief Investment Officer at Nova Digital, a Brevan Howard fund. Hu did not immediately return a request for comment. The Block first reported his move to Brevan Howard in January.

“After extensive discussions, we decided that Brevan Howard, one of the largest hedge funds in the world, was the right long-term home for Kevin and his team,” according to an internal Dragonfly document reviewed by Bloomberg News.

Last May, just prior to the collapse of Do Kwon’s algorithmic stablecoin TerraUSD, Dragonfly raised $650 million for its third venture fund. The spinoff of the Liquid Opportunities fund was unrelated to last year’s crypto blowups, including the collapse of FTX, the document said. Rather, Dragonfly — which acquired hedge fund MetaStable Capital last August — found “managing two hedge funds with different strategies under the same umbrella incurs a surprisingly large amount of friction.”

“For existing Dragonfly Venture Fund and MetaStable LPs, nothing changes,” the document said. “This spin-out simply means we can streamline our operations and focus more fully on our bread and butter, which is long-term investing.”

Representatives from Brevan Howard and Dragonfly declined to comment.

Brevan Howard’s earlier push into digital assets included plans — reported by Bloomberg — to open an outpost in Abu Dhabi. Hu is based in Dubai.