Daniel Goldberg, Morgan Stanley’s 35-year old head of hedge fund prime brokerage is starting a new hedge fund with Farallon as a minority partner.
Farallon is billionaire Tom Steyer‘s San Franciso-based fund.
This is a big move for Goldberg. Morgan Stanley hired the former head of Brazil’s antitrust agency at the Justice Ministry (a job he scored at age 27) in 2007 to lead mergers and acquisitions.
In 2010, Morgan Stanley started a prime brokerage headed by Goldberg. Maria Bartiromo interviewed him about the venture in April 2011.
It’s unclear if his new fund will be based in Brazil, but it’s pretty safe to assume so considering that’s his area of expertise, as you’ll see below.
What he told Bartiromo basically explains why he’s starting a hedge fund.
“The hedge fund community has been quite active for quite a long time in Brazil and with the booming capital markets movement and with equity capital markets hot, with debt capital markets hot, and with the economy growing as fast as it’s growing, you can no longer ignore the local hedge funds community. It’s a very large constituency and we decided to cater to our main clients and establish an operation specifically targeting local hedge funds and their needs.”
On the M&A activity in Brazil:
Last year we had in Brazil about $181 billion of M&A deal activity, which was huge. And 2010 was a big rebound year for Brazil. 2011 is going to be a bit slower than 2010, but it’s still going to be a hot year for M&A. We’re expecting $100 billion+ of M&A activity. On the IPO front, there’s going to be a lot of [them]. Because again, the government is trying to stimulate equity FDI financing, at the expense of short-term debt financing coming from abroad. So we expect at least 20-30 IPOs this year plus at least $100 billion of M&A activity which translates to at least 300 deals done locally by Brazil companies on either side of the trade.
On why investors are bullish on Brazil:
There’s the middle class, another 25 million people are going to enter the middle class in the next 4 years or so. A lot of investors are somewhat cautious about the inflation scenario we talked about a while ago, but they’re sitll very bullish on the secular trend of the consumer Brazil being powered and growing at the pace that it is now. Because consumption and services is about 63% of the economy, that’s a big chunk of the story.