Pierre-Henri Flamand, a 15 year veteran employee of Goldman Sachs recently left Goldman Sachs to start his own firm.   Mr. Flamand formerly ran  Goldman Principal Investments.  His new fund may raise as much as $1 billion.  Six years ago, another Goldman employee, Eric Mindich, raised $3 billion for his fund Eton Park Capital.

According to Mr. Cahill of Bloomberg,  Pierre-Henri Flamand, the head of Goldman Sachs Group Inc.’s largest internal hedge fund, is retiring from the world’s most profitable securities firm to start a hedge fund, according to three people with knowledge of his plans.

Flamand, 39, has worked at Goldman Sachs for 15 years and has run Goldman Sachs Principal Strategies from London since 2007. He didn’t respond to calls or e-mails seeking comment. A Goldman Sachs executive in London confirmed the departure and said the company supports Flamand’s plan.

Flamand is setting up his own fund as Wall Street pay and proprietary trading come under increased scrutiny from lawmakers. Goldman Sachs Investment Partners, founded by a former principal strategies team, was transformed into a hedge fund managing $7 billion in 2008 and became part of Goldman’s asset management unit.

“Goldman Sachs is the best money-making machine in the world but compensation is subject to public policy — if you go private it’s your own business,” said Jerome Lussan, chief executive officer of Laven Partners LLP, a London-based hedge fund consultancy. “You could have been the best prop trader in the world and you would have been paid less last year than you might have expected.”

Goldman Sachs Principal Strategies rebounded from losses in 2008 to fuel the firm’s 7 percent gain in equity revenues to $9.89 billion in 2009, according to its annual report. The business seeks to profit from discrepancies in relative values of financial instruments, convertible bonds and “various types of volatility trading,” according to the report.

“Results in principal strategies were positive compared with losses in 2008,” Goldman said in its 10-K filing with the U.S. Securities and Exchange Commission. That helped make up for a reduction in revenue in the rest of Goldman Sachs’s equities business last year, according to the filing.

Before 2007, Flamand was head of Goldman Sachs Principal Strategies in Europe from 2002. While his background at Goldman will help lure investors, he’ll face a more challenging fund- raising environment than his fellow Goldman Sachs veterans who set up their own firms, said Lussan.

Former Goldman Sachs partner Eric Mindich founded Eton Park Capital Management LP with $3 billion in 2004.

“There’s so much less appetite today, if he gets a billion to start today it’ll be a massive launch,” said Lussan. “The world has a lot less means than it used to.”