Cantor Farms Out Cap-Intro Tasks
MARCH 17, 2021 (HEDGE FUND ALERT) – Cantor Fitzgerald is outsourcing most of its capital-introduction functions to Layton Road Group.
The arrangement became effective this month, with Cantor paying Layton Road an undisclosed fee to facilitate meetings between the hedge funds that use the bank’s prime-brokerage services and prospective investors.
For Cantor, the setup is less costly than building and maintaining an in-house cap-intro team. It also frees the firm from having to replicate services Layton Road already offers in a ready-made package.
To that end, Cantor sees Layton Road as bolstering the work of two cap-intro staffers who remain on board in New York. The bank lost some staff last year, including cap-intro head Emma Sugarman, who left in July to join fund operator Argos Global.
“Capital raising is increasingly more complex. We believe this relationship with Layton Road will give our clients access to a unique investor base,” said Jon Yalmokas, head of Cantor’s prime-brokerage group.
For Layton Road, Cantor replaces the Gladstone, N.J., firm’s first and only cap-intro client, BNP Paribas. That shift reflects the Paris bank’s 2019 purchase of Deutsche Bank’s prime-brokerage division, which came with its own cap-intro unit.
With BNP having absorbed Deutsche’s clients and staff, and its contract with Layton Road expiring this month, the bank opted not to renew.
Layton Road was founded in 2018 by Tom Mahala, the former head of BNP’s cap-intro group. The firm also offers placement-agent services, with a client base consisting of about 15 hedge fund and private equity firms. Many are in niche areas including cryptocurrency investing, environmental, social and governance strategies and litigation finance.
Layton Road’s private-placement business additionally hosts virtual conferences on digital-asset investing. It plans to hold its next such event in the coming months.
Cantor’s prime-brokerage group caters mainly to small and mid-size hedge fund operators, working with more than 250 management firms overall. It ranked 21st in Hedge Fund Alert’s first-quarter 2020 prime-broker league table with 57 clients large enough to be registered with the SEC.
Cantor is best known as a fixed-income dealer but has been building an equity division whose clients include long/short hedge fund managers.
For the full story, check out Hedge Fund Alert’s March 17, 2021 issue.