Blackstone Group will initially invest $150 million in the fund, according to people familiar with the matter, Bloomberg said. The event-driven fund aims to raise $500 million to $1 billion, Blackstone Altius told potential investors.

US-listed Blackstone is tapping new opportunities for investors willing to take riskier bets after the global credit contraction and stock market rout led to the worst start to a year in almost two decades for hedge funds. The new fund will seek returns from investing in Asian companies involved in mergers, acquisitions, bankruptcies and reorganisations.

Hedge fund start-ups are seeking the backing of established houses such as Blackstone to help attract other investors as money flowing into the industry slows and large institutions such as pension funds and insurers dominate investments.

Investors in hedge funds, which are mostly private, unregulated pools of capital, are holding an "unprecedented'' amount of cash after markets declined because of the US subprime collapse, according to a Deutsche Bank AG survey in March of money managers and pension plans with almost $1 trillion in hedge funds.