(Bloomberg) — Kimura Capital LLP, a London-based provider of trade finance credit for commodities, is starting a hedge fund as it looks to capitalize on resurgent investor interest in natural resources.
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The company has brought in a team from Gaspara Asset Management — led by former Trafigura Group traders John Bell and Jonny Allen — to launch the Kimura Gaspara Fund1, which will focus on market fundamentals.
It will start in the second quarter with $150 million in managed assets, with the goal of increasing that amount to around $2 billion in two years, Chief Executive Officer Kristofer Tremaine said in an interview.
While some traders are betting against future volatility in commodities — following a period of upheaval starting with the pandemic — Kimura sees a shake-up looming in markets for oil, metals and agriculture. Tremaine, who founded the firm in 2013, said new infrastructure projects, a potential weakening of the dollar and supply and demand imbalances caused by the energy transition all present opportunities.
“We’re going through a number of really interesting paradigm shifts,” he said.
Kimura’s core credit business has expanded in recent years, as rising interest rates mean the company’s offering, typically priced higher than traditional bank lending, has become more competitive.
The firm now lends around $500 million per month against physical commodity trades, and its private credit strategy returned 8.6% last year, net of all fees to institutional managed account investors, according to a person familiar with the matter.
Higher interest rates and a subsequent crunch in credit for smaller physical trading companies have also played into Tremaine’s reasoning for setting up the new hedge fund.
A stint in 2006 at French Bank Societe Generale SA, where he worked on a desk devoted to commodity clients, showed him the need for investment options in the sector. But the end of a China-led super-cycle in commodity prices came to an end, causing many specialist hedge funds to close.
“Now that role in an investment bank doesn’t exist because basically there’s no clients,” Tremaine said. “I think we’re seeing now that you’re going to see another growth spurt in the space, and it’s driven by investor demand.”
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