Arthur Hayes’ home office Maelstrom is seeking $250 million in capital investment to finance a private equity fund targeted at mid-sized crypto companies. According to Bloomberg, the fund is designed to provide traditional investors more access to the crypto market amid a spectacular recovery from the FTX-inspired market crash in November 2022.
The fund, tagged as Maelstrom Equity Fund I, is expected to cover the acquisition of six crypto companies, with each purchase expected to range between $40 million-$75 million. Notably, there will be a strategic focus on blockchain service providers, including trading infrastructure and analytics startups.
Vaidaya describes the new initiative as the first control-buyout PE fund to focus solely on the crypto ecosystem. The Maelstrom Equity Fund I is to achieve profitability in three main ways. First of which is providing founders of supporting blockchain services to access clean exit opportunities at reasonable valuations.
Furthermore, the PE fund would also aim to help new TradFi entrants to the crypto space navigate investment in businesses by providing them access to “an acquisition-ready portfolio of cash-flowing, growing businesses for future buyers of crypto businesses like Robinhood, Charles Schwab, X, Wealthfront, etc.” Finally, Hayes, Vaidaya and newly hired partner Adam Schlegel are also looking to offer capital allocators such as pension funds or other family offices the opportunity to invest capital at scale, e.g, 9 figures+, into the “most fundamentally valuable” sectors of the crypto economy, i.e., the blockchain supporting business, without having to worry about token exposure or market volatility.
Interestingly, Bloomberg notes that Maelstrom’s proposed equity fund comes amidst a challenging period as PE firms are globally struggling to attract capital. In the crypto market, PE investment is reportedly down to $1.4 billion, representing a 65% decline from the peak of 2021, which suggests a significant business risk for Hayes and partners.
However, a series of high-profile acquisitions amidst a rebounding market since the FTX crash, coupled with the mechanics of the Maelstrom, provides an appealing context for investors. At press time, the total crypto market cap is valued at $3.59 trillion following a 1.06% decline in the last 24 hours.
