James Tu, one of the founders of Hong Kong-based multi-strategy manager Nine Masts Capital, is leaving to establish his own hedge fund business which is likely to be backed by the firm, sister-title AsiaHedge has learned.

Hong Kong-based Long Corridor Capital will pursue the same strategy Tu ran at Nine Masts, a relative value, arbitrage fund that trades Asian equities, swaps, OTC derivatives and convertible bonds.

An executive familiar with the situation said Tu is transitioning to depart Nine Masts early next year. The source said the relationship between the founders remained friendly and that co-founder Bing Wang is likely to invest in the new fund.

A former head of hedge fund services for Asia-Pacific at Northern Trust, is understood to be joining Tu at the new firm as the start-up’s first COO. It is not clear whether that is Ali Sheikh, who left Northern Trust in April. The firm this week posted an opening for an assistant to the COO

Long Corridor obtained its certificate of incorporation in Hong Kong in February this year.

Nine Masts has itself been aggressively hiring since last year, with top hires in 2018 including long-time Nezu portfolio manager Anthony Yik and ex-Susquehanna’s veteran trader and portfolio manager Daniel McCosker.

Nine Masts, is one of the more successful indigenous hedge funds to emerge from the region in recent years and was established by Tu together with three other partners, including Bing Wang, who was credited for establishing Boaz Weinstein’s Saba Principal Strategies prop desk in Asia, while Tu worked before at DKR Oasis running convertible bonds, volatility and equity arbitrage investments from 2002.

Nine Masts was estimated to be running around $1.4bn in hedge fund assets at the end of last year, according to the latest AsiaHedge Billion Dollar Club. The firm is named after treasure ships used by the Chinese explorer Zheng He on his expeditions to Southeast Asia, South Asia, Arabia and East Africa in the 15th century.

Nine Masts said no-one was available to comment on the departure.

Long Corridor was unavailable to comment.

Nine Masts co-founder James Tu preps new fund on AsiaHedge.