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BH Digital raises $9 million for its liquid token strategy

Deals • March 23, 2023, 7:41AM EDT Published 1 hour and 35 minutes earlier on | Alamy

Quick Take

  • BH Digital has raised $9 million for its Nova Digital Opportunities fund.
  • Nova Digital is overseen by portfolio manager Kevin Hu, who recently joined BH Digital from Dragonfly Capital.

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BH Digital has raised $9 million from investors for its liquid token strategy, known as the Nova Digital Opportunities fund.

The fund has three investors — with the first sale taking place at the start of March, according to a regulatory filing. The fund launched in 2022, the filing said.

Nova Digital is a branch within hedge fund Brevan Howard’s digital assets arm, BH Digital. It’s headed by BlackRock and Dragonfly Capital veteran Kevin Hu, who reports directly to BH Digital’s chief executive Gautam Sharma.

Hu and some of his investment team from Dragonfly now run a liquid token strategy for BH Digital under the Nova Digital moniker, said a source familiar with the design. The strategy manages both BH Digital’s capital as well as from external limited partners, they added.

Dragonfly’s spin off

Bloomberg reported at the start of March that Brevan Howard would take over Dragonfly’s liquid opportunities fund, a long-short hedge fund overseen by Hu. 

“After extensive discussions, we decided that Brevan Howard, one of the largest hedge funds in the world, was the right long-term home for Kevin and his team,” Bloomberg reported, citing an internal document.

The spin-out of Dragonfly’s liquid opportunities fund to BH Digital came down to the challenges of managing two hedge funds with different strategies under the same umbrella, the Bloomberg report said. Dragonfly acquired hedge fund MetaStable Capital last year.

“For existing Dragonfly Venture Fund and MetaStable LPs, nothing changes,” said Bloomberg’s report citing the document.

It’s unclear whether the $9 million in capital for the Nova Digital Opportunities fund is from existing Dragonfly limited partners or new investors. The fund is now soft closed and not being marketed actively, the source said.

Brevan Howard formally launched BH Digital in 2021 to help institutional investors gain access to crypto. It has over 60 employees, and its portfolio managers have a range of specialties, from liquid token trading to seed-stage investing. The hedge fund’s billionaire co-founder, Alan Howard, started investing heavily in crypto startups in late 2020 and has built out his own generative art collection.