Paul Allen, who co-founded Microsoft with Bill Gates, is set to invest $1bn (€840m) of his personal wealth in an investment company to be founded by Mike McCaffrey, a former chief executive of Stanford University's endowment.

Allen, reportedly worth $22.5bn, is planning to invest in a multi-strategy fund of funds run by the new firm, according to Hedge Fund Alert, a specialist journal. He will also take an equity stake in the firm. The investments are expected to be finalised by the end of next month.