Citadel commits $500M to Toms Capital

Citadel has committed about $500 million to New York hedge fund Toms Capital, according to people familiar with the matter. The allocation is a rare instance of the firm placing a large pool of capital with an outside manager rather than deploying it internally, and it was announced recently.

Toms Capital was founded in 2018 by Benjamin Pass and runs an event-driven long-short equity strategy. Regulatory filings show the firm managed about $2.8 billion at the end of last year.

Rock Khanna, Citadel’s chief strategy and transformation officer, identified Pass as among a small group of managers to whom Citadel has previously committed capital.

Pass noted Citadel’s scale, infrastructure and reputation made the firm an attractive partner for Toms Capital’s strategy. Pass previously ran public market investments at a family office beginning in 2013 and spent more than seven years at GLG Partners managing equities before starting Toms Capital.

Large multi-strategy firms often allocate capital to external portfolio managers to expand investment capacity and diversify sources of return. Citadel has been more selective about external allocations than some peers. The firm previously backed Candlestick Capital in 2019 and provided capital to Melvin Capital Management; both of those firms have since closed.

The $500 million allocation represents a substantial capital base relative to Toms Capital’s reported assets under management.