(Bloomberg) -- Quant pioneer D.E. Shaw & Co. is launching its first-ever private equity fund, the latest in a stream of hedge funds pushing into the lucrative pre-IPO space.
The D.E. Shaw Voltaic Fund is seeking to raise $500 million to invest in private companies, according to people familiar with the matter. It has already gathered almost $200 million in commitments, a chunk of which is the firm's money, one the people said. It will focus on growth equity companies and have a five-year time horizon.
A spokeswoman for the New York-based firm, which runs more than $60 billion, declined to comment.
Soaring valuations, a hot market for initial public offerings and the ability of deep-pocketed investors to snap up private stakes relatively cheaply is making the space attractive for hedge funds.
Read more: Hedge Funds Salvage 2021 Gains as Private Investments Shine
While Voltaic is D.E. Shaw's first standalone vehicle to invest in the equity of private companies, the firm has been making such investments through its main hedge funds for years. It has made private bets in the technology space since the 1990s and in renewable energy since the mid-2000s. It has also has moved into private credit.
Read more: D.E. Shaw Plans $1 Billion Fund to Target Credit Dislocations
Some private investments have been made by the firm's Fundamental Equities team. The leader of that unit, Edwin Jager, will oversee the new fund, one of the people said.
Hedge funds have been ramping up illiquid wagers in recent years. Steve Cohen's Point72 Asset Management and Viking Global Investors raised private equity funds last year.
The space has proved lucrative. Tiger Global Management's fast-growing privates unit made $14 billion from the IPO of 27 companies last year alone. And Viking's existing hybrid public-privates fund rose 20% in 2021, while its hedge fund posted its worst year ever.
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