Carl Icahn, the former corporate raider, is raising money for a new multistrategy hedge fund, according to well-placed market sources.

One individual familiar with the fund, who requested anonymity, said Mr. Icahn’s goal is to raise several billion dollars.

It is believed Mr. Icahn’s partners in his fund venture include Keith Meister, a long-standing Icahn associate, and Grosvenor Capital Management’s Dick Elden, a pioneer in the fund-of-funds sector with a 30-year track record.

Word of Mr. Icahn’s plans is coming at a time when returns in the industry have been below historic levels but as institutional investors are pouring increased sums into hedge funds.

Recently, a former Goldman Sachs partner, Eric Mindich, reportedly is having little trouble raising up to $3 billion for Eton Park Capital Management, his multistrategy fund scheduled to launch in October.

A hedge fund consultancy, the Hennessee Group, estimates that hedge funds now manage more than $800 billion – $200 billion more than was under management in early 2003.

Their new fund would invest across a variety of interconnected strategies, including long-short equity, distressed debt investment, credit arbitrage, capital structure arbitrage and convertible arbitrage.

Calls to Mr. Icahn in New York and Mr. Elden were not returned.

Mr. Icahn – worth $7.6 billion according to Forbes magazine – came to prominence in the mid-1980s as a so-called corporate raider, who initially made millions “greenmailing” corporations, or getting worried corporate management to buy his equity position in their company at an above-market price, in return for dropping his takeover bid.

Unlike several of his colleagues in the merger arbitrage sector, Mr. Icahn’s investments became longer-term. Most famously, he bought troubled airline TWA in 1985 and ran it for several years.

He is chairman of gaming company American Real Estate Partners and is president of Starfire Holding Corp., formerly known as Icahn Holdings, which owns ACF Industries, a railcar manufacturer he bought in a leveraged buyout in 1984.

Recently, Mr. Icahn’s 2000 investment in General Motors – he had filed documents with the Securities & Exchange Commission stating his intention to purchase up to 15% of the stock – is credited with forcing the giant automaker to take sharp measures to boost the then-sagging stock price.

Always considered an iconoclast, Mr. Icahn raised eyebrows with a series of large purchases of Imclone stock, begun on the December 27 2001, the same day Martha Stewart sold hers, which led to her recent conviction for lying to investigators. An April Wall Street Journal report estimated that Mr. Ichan made $250 million on his Imclone investment last year.

The investor with knowledge of Mr. Icahn’s fund-of-funds venture said Mr. Icahn’s attraction to the strategy might be the growing sense on Wall Street that fund-of-funds offer the opportunity to independently capitalize the vehicle via a public offering.

He cited the example of Britain’s Man Group PLC, a publicly traded fund-of-funds with a $7 billion market capitalization, and GAM Group, the formerly publicly traded fund-of-funds group purchased by UBS in 1999, that now manages $34.8 billion.

Several veteran hedge fund investors expressed confidence that Messrs. Icahn and Mindich would easily raise several billion dollars for their respective funds.

Mr. Mindich, 36, though not as high profile as Mr. Icahn, has certainly had his share of professional success. Named the youngest partner in Goldman Sachs’ history at the age of 27 in 1994 for his accomplishments on the firm’s risk-arbitrage desk, he resigned in May to begin the process of organizing Eton Park.

During his 15 years at Goldman, Mr. Mindich ran several business lines, including the firms equity derivatives and equity businesses. At the time of his departure, he was a member of the firm’s strategy committee.

One investor said Mr. Mindich and his Eton Park partners would be handsomely rewarded for their efforts if profitable, given their higher management and performance fees. They also seek to lock-up, or restrict withdrawal of investor capital, for a period of three to four and one half years, depending on the shares of the fund.

The industry standard is a 1% management fee and 20% performance fee. The investor said a fund with Mr. Icahn and Mr. Elden at the helm would also have little problem charging higher fees.