DE Shaw Broadens Asian Reach

DE Shaw, the US$28bn hedge fund founded by mathematician David Shaw, is to open offices in Shanghai and Tokyo as part of an expansion in Asia, according to people familiar with the situation.

The Shanghai office, to house a team of private equity analysts, will increase the group's presence in the region and mark its first expansion into mainland China. It will focus on acquisition opportunities in China.

In the Tokyo office investor relations staff will deal with such functions as marketing and account management.

Several large hedge funds have begun to bulk up their presence in the region. GLG, Moore Capital and Soros Fund Management are among those looking to open offices.

DE Shaw is the largest fund yet to make the move, and is doing so on a scale beyond that of its rivals.

Both of DE Shaw's new offices are expected to open in the next few months. The firm declined to comment on the subject.

The fund manager currently has an office in Hong Kong, which focuses on Chinese private equity opportunities. It opened in 2007 and is run by Liang Meng.

The move into mainland China will invite comparisons to the company's expansion in India in 2006 and 2007, where it saw huge recruitment and investment opportunities.

DE Shaw's Indian operations are now its largest base outside the US. It currently employs 700 people in the country.

The greater part of DE Shaw's investments are made using complicated mathematical models that aim to spot hidden market trends or pricing anomalies, although the fund manager has recently expanded into private equity and bottom-up value-driven investing.

People close to the group say DE Shaw sees pools of talent suitable for recruitment in Asia as well as the investment opportunities.

By number of staff, DE Shaw dwarfs some of its more nimble rivals. The company employs about 1,700 people an estimated 100 of whom hold PhDs. Only the UK's Man Group a FTSE 100-listed company that has more than US$44bn under management employs more.

The publicity-shy DE Shaw has seen solid performance across its principal strategies during the past two years.

The firm's flagship Oculus fund which blends investments in a range of underlying quantitative and qualitative strategies run by the group returned 8.7 per cent last year.

Another of its funds, the DE Shaw Composite, returned 21.1 per cent, according to an investor.

DE Shaw was founded in 1982. Mr Shaw announced his retirement from the day-to-day running of the business in 2001. However, he remains the company's largest shareholder.