Another big hedge fund is preparing for life beyond its founder, as Farallon Capital announced on Monday that its senior managing member, Thomas F. Steyer, would leave the firm at year end.
Andrew J. M. Spokes, who serves as co-managing partner alongside Mr. Steyer, will formally assume control of the investment firm at that time.
When he leaves, Mr. Steyer will be the latest hedge fund magnate to make an effort at transforming his firm into a durable institution. Among the most prominent individuals who have already made the transition is Bruce Kovner of Caxton Associates, who left the firm last year in the hands of Andrew Law. And D.E. Shaw's David Shaw has passed on management responsibilities to a committee.
The jury remains out on whether such moves will work. Shumway Capital's eponymous founder, Chris Shumway, announced his intentions to leave his firm in November of 2010, putting it in the hands of a trusted lieutenant. But antsy investors began d emanding their money back, forcing Mr. Shumway to recommit himself to the hedge fund - and eventually leading to the returning of all investor money.
Farallon is hoping not to repeat that incident. In a letter to investors reviewed by DealBook, Mr. Steyer wrote that he has been steadily handing Mr. Spokes more responsibility over the last five years.
“The announcement is the natural next step, is accepted internally and won't change our mode of operation,†he wrote. “The playbook won't change when I leave.â€
And Mr. Steyer made clear that his separation would be final. He will have no official role or responsibilities at the firm, and his partners will buy out his share of the hedge fund's profits.
Mr. Steyer, who once worked in risk arbitrage at Goldman Sachs in Manhattan, founded the hedge fund in California in 1986, with help from the partners of the private equity firm Hellman & Friedman. Farallon has more than $19 billion in assets under management, according to AR magazine.
