By Freya Berry
LONDON (Reuters) - Paris-based investment firm La Francaise and Anglo-Italian hedge fund manager TAGES Capital are combining assets to form a European fund of hedge funds joint venture.
Under the terms of the agreement, La Francaise is taking a 40 percent stake in London hedge fund manager TAGES Capital and will hand over control of its $1 billion (608 million pounds) in assets to form a $3 billion multi-manager business, the companies said on Tuesday.
Funds of funds invest client money in portfolios of hand-picked investment vehicles, rather than taking bets in individual securities.
The move is a rare expression of faith in the fund of hedge fund model, which has seen many players wind down operations amid criticism of extra layers of fees when hedge funds have delivered poor returns since the financial crisis.
"The announced partnership is a further validation of our approach to alternative multi-manager investment," said Panfilo Tarantelli, head of TAGES Holding and a former senior executive at Citigroup
The transaction is subject to regulatory approval.
(Editing by David Holmes)