Highbridge Expands Credit Business

Highbridge Capital Management is boosting its bet on the credit markets. The $26 billion hedge fund firm, owned by JP Morgan Chase, has hired Serge Adam as a Managing Director of Highbridge Principal Strategies. He will share responsibility for managing the HPS public credit business with HPS Managing Director Purnima Puri.

Adam had spent 10 years at Sandell Asset Management, where he was most recently a senior managing director and portfolio manager for its credit business.

Puri has been with Highbridge for three years, running the firm’s $1 billion or so levered loan fund, which was up 99 percent in 2009 and 19 percent last year. She previously spent five years as a senior analyst for Jonathan Kolatch’s Redwood Capital Management, which focuses on distressed and stressed credit. Before that, she spent five years with Goldman, Sachs as a member of its Special Situations Group.

Sources say Puri has more expertise on the long side while Adam brings a strong background on the short side. And after the big upward moves in the credit markets over the past two years and their outlook for rising interest rates, Highbridge is now said to be focused on building a more balanced book.

In fact, although Highbridge recently got rid of its event-driven equities team, event-driven opportunities in the credit space will also be a focus of Adam and Puri.

Highbridge, of course, was founded by childhood friends Glenn Dubin and Henry Swieca. JP Morgan completed its purchase of the firm in 2009. Dubin still is very actively involved, serving as Chief Executive Officer of Highbridge.

It created Highbridge Principal Strategies (HPS), its private equity and credit investment platform in 2007 after bringing in Scott Kapnick as CEO. He had previously served as Managing Director at Goldman Sachs Group. HPS currently manages more than $7 billion of capital across several investment vehicles. Its strategies include privately negotiated mezzanine debt, public credit, including loans and bonds, direct lending, and growth equity.

The expansion of its credit business comes a few months after Highbridge bought a majority stake in Gávea Investimentos, a Brazilian alternative asset management firm. It was co-founded in 2003 by Chairman and Chief Investment Officer Arminio Fraga, former President of the Central Bank of Brazil.

Like most multistrat funds, last year, Highbridge’s flagship fund struggled somewhat, especially in the middle of the year. It finished the year up 7 percent, around the same as Paul Tudor Jones II’s Tudor BVI and much better than Louis Bacon’s Moore Global Investments.

Its Asia Opportunity fund was up 8 percent and Quantitative Commodities fund up 31 percent.