Harel Seeks to Expand Hedge Fund Operations by Acquiring Tulip Capital Management
Harel Insurance, led by CEO Nir Cohen, is negotiating to acquire shares in Tulip Capital GP, the management company of the hedge fund Tulip, for an estimated valuation of around 40 million shekels. Tulip, founded in 2012, manages approximately 400 million shekels in its hedge fund. This acquisition is expected to significantly enhance Harel's marketing and distribution capabilities for the fund, leveraging its extensive client base and broad distribution network. The main shareholders of Tulip are Micha Malka (41%) and Baruch Tsibin (44%), both with professional backgrounds at Harel. Malka serves as Tulip's managing partner and CEO, while Tsibin is the managing partner and chief investment officer. Another managing partner is Moshe Gabay, formerly of Prisma and Migdal.
Harel has deep experience with hedge funds and currently manages several funds focused on private equity, real estate, and credit. In 2023, Harel and Tulip jointly launched the Harel Multi-Strategy hedge fund, one of Israel's first and largest hedge funds available as a mutual fund, with assets totaling about 1.2 billion shekels. This fund yielded a 35.6% return over the past year, compared to a 40.7% rise in the TA-125 index, primarily investing in Israeli equities. Unlike traditional hedge funds limited to qualified investors, this fund is accessible to the general public through mutual fund platforms, offering retail investors exposure to hedge fund strategies.
The success of this partnership likely motivates Harel's interest in acquiring Tulip's management company to deepen collaboration. This move reflects a broader industry trend where investment houses are increasingly acquiring hedge fund management firms to expand alternative investment offerings. For example, Meitav acquired control of Trio's management company, and IBI purchased a majority stake in Plutus's management company. Hedge fund managers often prefer focusing on investment management while partnering with investment houses that provide distribution and operational support.
An industry insider noted that investment houses recognize the profitability of hedge fund business models, which typically charge higher management and performance fees than mutual funds, justifying their willingness to pay high multiples for hedge fund management companies. Harel declined to comment, and Tulip did not respond to requests for comment.
