Citadel has made an unusual external capital allocation, committing approximately $500m to New York-based hedge fund Toms Capital Investment Management, according to a report by Bloomberg citing unnamed people familiar with the matter.

The investment marks a relatively rare instance of Ken Griffin’s multi-strategy firm placing capital with an outside manager rather than deploying it internally. Toms Capital, founded by Benjamin Pass, runs an event-driven long-short equity strategy and managed around $2.8bn at the end of last year, according to regulatory filings.

Citadel said the allocation reflects a long-standing practice of selectively backing high-performing external managers. Rock Khanna, the firm’s chief strategy and transformation officer, described Pass as part of a small group of managers to whom Citadel has previously committed capital.

Pass, in turn, said Citadel’s scale, infrastructure and reputation made it an attractive partner for the strategy.

Large multi-strategy hedge funds, including Millennium Management and Qube Research & Technologies, regularly allocate capital to external portfolio managers as a way to expand investment capacity and diversify returns. However, Citadel is known to do so more sparingly, making the commitment to Toms Capital notable within the industry.

Citadel has previously supported external hedge fund launches, including backing former portfolio manager Jack Woodruff’s Candlestick Capital in 2019, as well as providing capital to Melvin Capital Management, though both of those firms have since closed.

Toms Capital was founded in 2018 by Pass, who previously ran public market investments at a family office beginning in 2013. Earlier in his career, he spent more than seven years at GLG Partners managing capital across equities.