Rob Allard and Jonathan Egol, both former managing directors at Goldman Sachs, are to launch a private debt hedge fund later this year, with a focus on investment opportunities stemming from financial regulatory reform and bank capitalisation requirements.
Allard was head of Structured Product Origination and Distribution at GS, while Egol was head of the Mortgage CDO, Correlation and Derivatives trading business in addition to sitting on GS Bank Risk and Counterparty Credit Risk Committees.
The fund will be called Firebreak, and will be active in the illiquid lending and investment sector. The fund’s emergence comes off what the founders see as a fundamental secular shift in the way borrowing and lending are pursued in the wake of regulations that came in after 2008.
“There now exists a lending market that is, and will continue to be, underserved by the traditional banking system, emerging as a widely recognised trend across a variety of assets that require finance particularly in the more complex, structured solution based financing that will be Firebreak’s specialty,” the founders note.
Allard said: “The skillset required to be successful in monetising this opportunity is distinct and unique from typical fixed-income trading strategies. It comes from sell-side experience, a deep well of sourcing, structuring, and risk management expertise tested through market cycles. You either have that experience or you don’t.”
Egol said: “Today, private debt is a natural place for investors to turn to achieve better risk-adjusted returns versus the more traditional fixed income allocations. Within this strategy, we build the product interactively with the borrower. If you have a better understanding of what the borrower needs, you can build something that is more desirable, rather than simply reaching for returns.”