Last year was a struggle for Brevan Howard Digital, the crypto-investing unit of the $34 billion asset manager.
The Brevan Howard Digital Asset fund, its flagship multi-strategy offering that invests in public and private companies, as well as digital assets, lost nearly 30%. The unit’s leader since it launched in 2021, Gautam Sharma, left the firm. Assets in the business declined from $2.5 billion earlier in the year to roughly $2 billion by the end of the summer.
Now, under the leadership of former Coinbase executive Chris Rayner-Cook, the digital asset group is bringing in new talent, rolling out new strategies, and receiving interest from sovereign wealth funds. The goal is to take advantage of what Brevan believes is a structural shift in the crypto and blockchain industry.
“There are more opportunities in the applications on blockchain, there are more opportunities in equities, there are more opportunities in late-stage companies,” Rayner-Cook said in an interview with Business Insider.
His thesis on the changing nature of the industry is that the space has evolved from one that moves a group based on broader macro trends to one that has specific winners and losers. Active managers looking for alpha should be able to find opportunities in the coming “dispersion,” he said, and Brevan’s leadership expects its platform to help PMs take advantage.
The digital assets space has moved from the installation phase, where companies and industry advocates focused on building infrastructure and explaining the technology, to the application phase, when mainstream businesses use the tech without necessarily becoming a crypto or blockchain company themselves. He pointed to Visa, Mastercard, and PayPal rolling out new stablecoin products this year as examples.
Rayner-Cook said the unit’s broader investable universe will grow quickly, especially in public stocks. Right now, there are more than 80 listed equities that fit into their criteria, but he expects that number to more than double over the next 18 months as more companies use crypto tech.
“We will scale alongside the opportunity set,” Rayner-Cook said.
As such, Brevan has already added to its investment roster.
The firm has recently hired Omar Kanji as its head of growth investments; Kanji was previously a partner at venture capital firm Dragonfly. Additionally, Jason Li, a former investor for Millennium and Man Group, has been brought on as a portfolio manager and will trade public equities connected to the digital-asset world.
The unit’s flagship fund is down 3.8% this year through September, though Bitcoin has shed more than 4% over the same period, a person close to the firm said. The firm rolled out a stable-coin-focused strategy in February, which is up more than 35% this year, the person noted.
The changes in the industry and at Brevan have caught the eye of significant institutions, with inflows from sovereign wealth funds this year as well, the person said. The firm declined to provide an exact figure on the new capital.
Brevan has been one of the best-known asset managers in the digital asset space for years, in part because of the personal interest in crypto and blockchain technology from its billionaire founder, Alan Howard. The firm’s goal is to be the go-to crypto asset manager for big-name institutions looking for exposure to the space, and Brevan’s leaders believe the unit is ready to take off.
“The platform was built to be global, broad, and flexible,” Rayner-Cook said.
“It’s never been a more exciting time in this space.”