Alex Karnal’s Hedge Fund to Launch in April With $3.5 Billion

(Bloomberg) -- Former Deerfield Management partner Alex Karnal is starting his $3.5 billion hedge fund next month, one of the biggest U.S. launches in years.

His firm, Braidwell, will make public and private health-care investments, with a focus on biotechnology, pharmaceuticals, and medical devices and diagnostics, according to people familiar with the matter. It will debut April 1 and has already raised the cash in commitments, which it will call on over time as needed, the people said.

A spokesperson for the Stamford, Connecticut-based firm declined to comment.

While Durable Capital Partners started with $6 billion in February 2020, raising cash has been more challenging since the start of the pandemic, and the size of new hedge funds shrank dramatically as investors grew wary about giving money to managers they couldn't meet in person. That now appears to be changing, with forthcoming debuts from managers including Mala Gaonkar and Divya Nettimi, who are each expected to raise at least $1 billion.

The last flurry of big hedge fund launches came in 2018, when Dan Sundheim, Michael Gelband and Steve Cohen were preparing to begin with at least $4 billion apiece.

Karnal, who spent 15 years at Deerfield, will be Braidwell's chief investment officer, while co-founder Brian Kreiter, most recently chief operating officer at Bridgewater Associates, will serve as chief executive officer. The firm has about 25 employees.

As much as 20% of Braidwell's fund will focus on investing in the equity and debt of early- to late-stage private companies as well as providing structured debt to public companies, the people said. The rest will focus on making long and short wagers on stocks and convertible bonds. The fund has a 1.5% management fee and takes 20% of profits.