Farallon Capital Management, L.L.C.

Background

Farallon Capital Management, L.L.C. is a prominent American multi-strategy hedge fund headquartered in San Francisco, California. Established in 1986 by Tom Steyer, the firm has grown to manage approximately $39 billion in assets as of September 30, 2022. Farallon primarily serves university endowments, foundations, and high-net-worth individuals, emphasizing capital preservation and superior risk-adjusted returns through a flexible, bottom-up fundamental analysis approach.

Key Strategic Focus

Farallon's investment strategy is adaptive, allowing capital allocation across various asset classes and geographies based on prevailing opportunities. The firm's core investment strategies include:

Credit Investments: Targeting mispriced credit instruments globally, both public and private, with a solutions-oriented approach to facilitate constructive outcomes for stakeholders.

Strategic Capital: Engaging in private market transactions across the capital structure, offering bespoke investments tailored to counterparties' unique objectives.

Long/Short Equity: Investing in equities perceived as under or overpriced relative to intrinsic value, based on in-depth assessments and anticipating market events or catalysts.

Merger Arbitrage: Focusing on corporate takeovers to capture spreads between current and projected values of companies involved in mergers or acquisitions.

Real Estate Investments: Pursuing illiquid investments in real estate-related assets, emphasizing value addition through improvement, leasing, and management expertise.

Risk Arbitrage: Investing in publicly traded companies with theoretical arbitrage opportunities resulting from inefficiently priced trading markets.

Financials and Funding

As of September 30, 2022, Farallon manages approximately $39 billion in assets under management (AUM). The firm's revenue is estimated at $98.5 million annually, with a revenue per employee of approximately $279,719. Farallon operates on a fee-only structure, charging management fees up to 1% of AUM, and in some cases, performance-based fees.

Leadership Team

Farallon's leadership comprises experienced professionals with extensive tenure:

Nicolas Giauque: Managing Partner, appointed in 2022.

Andrew J.M. Spokes: Former Managing Partner, succeeded by Giauque in 2022.

Tom Steyer: Founder, served as Managing Partner until his departure in 2012 to focus on alternative energy advocacy.

The firm employs over 320 professionals across seven global offices, with an experienced senior investment team averaging 18 years at Farallon.

Leadership Changes

In 2022, Nicolas Giauque was appointed Managing Partner, succeeding Andrew J.M. Spokes, who had held the position since 2012 following Tom Steyer's departure.

Competitor Profile

Market Insights and Dynamics: The hedge fund industry is highly competitive, with firms managing substantial assets and employing diverse investment strategies. Farallon, with approximately $39 billion in AUM, competes with other large hedge funds in delivering superior risk-adjusted returns.

Competitor Analysis: Key competitors include:

Bridgewater Associates: Headquartered in Westport, CT, managing $89.6 billion in AUM.

Man Group: Based in London, UK, with $77.5 billion in AUM.

Elliott Investment Management: Located in West Palm Beach, FL, managing $69.7 billion in AUM.

Millennium Management, LLC: New York, NY-based, with $67.9 billion in AUM.

Citadel LLC: Headquartered in Miami, FL, managing $63.4 billion in AUM.

These firms employ various investment strategies, including global macro, quantitative, and activist approaches, contributing to a dynamic and competitive landscape.

Strategic Collaborations and Partnerships

Farallon has engaged in significant investments and partnerships, such as:

Bank Central Asia (BCA): Acquired control in 2002 for $531 million, later selling its stake profitably in 2006.

Astellas Pharma: In 2025, Farallon acquired over a 3% stake, becoming a top-three shareholder, aiming to collaborate with management to enhance share value.

Operational Insights

Farallon's flexible investment approach allows it to adapt to market conditions, allocating capital across strategies and geographies. This adaptability, combined with a focus on capital preservation and risk-adjusted returns, positions the firm competitively in the hedge fund industry.

Strategic Opportunities and Future Directions

Farallon continues to seek opportunities in mispriced assets and special situations globally. The firm's commitment to responsible investment practices, including its Responsible Investment Policy and adherence to the United Nations Principles for Responsible Investment (UN PRI), reflects its dedication to sustainable and ethical investing.