Billionaire hedge fund manager Paul Singer is the founder & CEO of Elliott Management. Singer is preparing to raise additional funds from investors to build up a war chest of cash to spend on new opportunities, as he anticipates a market downturn could be imminent, reported the Financial Times.
Elliott Management, a $38.3 billion activist fund, has spent the summer months stockpiling cash, closed a $2 billion co-investment fund in August to take companies private.
Now Singer is scrambling to raise an additional $5 billion, in a new funding round, before the cycle turns, according to FT sources.
"The hedge fund is using a drawdown structure that will feed into the main fund, an arrangement that is often used by private equity firms but has become more popular among activists," sources said.
A drawdown structure will allow investors not to immediately front capital to Elliott but instead will be called overtime as opportunities emerge.
Elliott used a similar structure in 2017 when it raised money for market disruptions. At the time, Singer told investors in a letter that the firm wanted to raise funds before investor liquidity dried up.
FT suggests Elliott's dash for cash is a sign that "Singer is anticipating a market meltdown. The billionaire investor, who has been vocal about complacency in global financial markets, recently predicted that the economy was headed for a significant downturn with risk at an all-time high."