Ajay Kapur, Citigroup Inc's New York-based chief global equity strategist, is returning to Hong Kong to set up a hedge fund called First Horse Capital, Bloomberg News said yesterday.

Niall MacLeod and two other members of Kapur's team left Citigroup, the world's largest financial firm by market value, and will join First Horse. Robert Buckland will replace Kapur, who became chief equity strategist in 2004 and correctly predicted US stocks would rise last year.

"I just thought that one should eat one's own cooking," said Kapur, 42, a holder of residency rights in Hong Kong. The results of investment models that Kapur and his team devised were "pretty good," he said from London.

Asia hand

First Horse Capital, named for the Indian cavalry regiment Kapur's father served in, will invest in stocks worldwide. Kapur declined to say how much money he's raised for First Horse Capital.

The fund is based in Hong Kong because to get information from China, India, Japan, "you need to be closer and on the ground," he said.

Other Wall Street advisers have also joined Asia-based hedge and buyout funds, where performances have outpaced Europe and North America. JPMorgan Chase & Co's co-head of China investment banking, Meng Liang, quit to join D.E. Shaw Group, people familiar with the situation said on Wednesday.

Asian hedge funds returned 16.1 percent last year, exceeding the 11.5 percent gains of their counterparts in North America and 11.35 percent in Europe, according to indexes run by Eurekahedge, a Singapore-based company that tracks the industry.

Chris Hsu, formerly a fund manager at Citadel Investment Group Ltd, will lead Asia's first start-up independent hedge fund to begin with more than US$1 billion, the Financial Times said yesterday, citing people familiar with the situation.

Hsu will be joined by Donald Yang, who was head of Asian debt capital markets at Merrill Lynch & Co, and Frank Qian, who had also worked at Citadel, the FT said.

Wall Street firms have also been leeching staffers to buyout firms in the region. Private equity and buyout transactions increased almost eightfold last year to US$122 billion, according to data compiled by Bloomberg.

Editor: Donald