Last week Dutch bank and activist hedge fund manager ABN AMRO received a letter from Royal Bank of Scotland, Banco Santander and Fortis in which they invited ABN AMRO to start exploratory talks regarding their intentions, the Dutch Decree on the Supervision of Securities Trade 1995 makes these kinds of requests possible.
The bank agreed to the request for a meeting and has invited all signatories to a meeting in Amsterdam early next week to seek clarification of their intentions and interests.
ABN AMRO and Barclays also announced today, regarding their possible merger/takeover, that they have extended the exclusivity period of their talks to the end of Friday 20 April 2007. ABN AMRO and Barclays are in talks regarding a potential combination of the two organizations that the statement says, "would create value for both sets of shareholders."
The bank also said in the statement, "The discussions, which seek to incorporate the broad objectives set out on 20 March 2007, are progressing, but there can be no certainty that they will lead to a transaction or the form it will take." The two banking groups have been in merger talks since Barclays confirmed it was in "exclusive preliminary discussions" with ABN on March 20.
Netherlands-based ABN AMRO is an international bank with total assets of 899.3 billion euros ($1.2 trillion). It's hedge fund arm, ABN AMRO Asset Management has over 173 billion euros ($235 billion) in assets under management.
18 Apr 2007
KBC Acquires Majority Stake in Russian Absolut Bank
Yesterday evening a deal between Belgian bank KBC Group NV and Russian bank Absolut was made in which the Belgian bank and hedge fund investor acquired 92.5% of shares in the Russian bank. It was announced in a press release this morning.
The deal values the bank at 761 million euros, ($1.03 billion) and is awaiting regulatory approval by the Central Bank of Russia. Absolut, established in 1993 and based in Moscow, is the seventh largest non-state-owned mortgage lender and offers universal banking services. Absolut has more than 1600 employees and 39 branches. KBC said it intends to keep the current key management in place.
KBC Group Chief Executive Andre Bergen said in a statement, "KBC's long-term strategic plans entail further expansion in the markets of emerging Europe. Russia is therefore an extension of our existing presence in neighboring Central and Eastern Europe."
KBC Bank & Insurance Holding Company itself was established in 1998 following the merger of three Belgian financial institutions. The Group's corporate history is a testament to the successful expansion into growth countries of Central and Eastern Europe which have joined the European Union in 2004, such as Hungary, Poland, the Czech Republic and Slovakia. KBC employs some 50,000 people and caters for twelve million customers.
The deal values the bank at 761 million euros, ($1.03 billion) and is awaiting regulatory approval by the Central Bank of Russia. Absolut, established in 1993 and based in Moscow, is the seventh largest non-state-owned mortgage lender and offers universal banking services. Absolut has more than 1600 employees and 39 branches. KBC said it intends to keep the current key management in place.
KBC Group Chief Executive Andre Bergen said in a statement, "KBC's long-term strategic plans entail further expansion in the markets of emerging Europe. Russia is therefore an extension of our existing presence in neighboring Central and Eastern Europe."
KBC Bank & Insurance Holding Company itself was established in 1998 following the merger of three Belgian financial institutions. The Group's corporate history is a testament to the successful expansion into growth countries of Central and Eastern Europe which have joined the European Union in 2004, such as Hungary, Poland, the Czech Republic and Slovakia. KBC employs some 50,000 people and caters for twelve million customers.
17 Apr 2007
Credit Suisse/Tremont Hedge Fund Index Up For March
The Credit Suisse/Tremont Hedge Fund Index is up 1.24% in March and up 3.34% for the first quarter of 2007 according to Oliver Schupp, President of the Credit Suisse Index Co., Inc.
“Despite getting off to a rocky start, global equity markets managed to recoup losses in the beginning of March and ended the month on a positive note. Markets were affected by remarks made by U.S. Federal Reserve Chairman, Ben Bernanke, that inflation is "uncomfortably high" promoting speculation that the U.S. central bank won't reduce interest rates to prop up the slowing economy, a weakening consumer confidence, and a growing housing slump,” said Mr. Schupp.
“Overall, this market environment has led to the estimation that eight of the ten hedge fund sectors will end March on a positive note. Long/Short Equity managers, in particular, were up 1.87% in March as industry themes and ongoing M&A activity provided stock specific opportunities, while superior stock selection paid off.” Performance for the Credit Suisse/Tremont Hedge Fund Index and its ten sub strategies is calculated monthly.
The Credit Suisse/Tremont Hedge Fund Index is comprised of 432 funds as of March 31, 2007. The Index is constructed using the Credit Suisse/Tremont database of more than 4,500 hedge funds. It includes both open and closed funds located in the U.S. and offshore, but does not include fund of funds.
“Despite getting off to a rocky start, global equity markets managed to recoup losses in the beginning of March and ended the month on a positive note. Markets were affected by remarks made by U.S. Federal Reserve Chairman, Ben Bernanke, that inflation is "uncomfortably high" promoting speculation that the U.S. central bank won't reduce interest rates to prop up the slowing economy, a weakening consumer confidence, and a growing housing slump,” said Mr. Schupp.
“Overall, this market environment has led to the estimation that eight of the ten hedge fund sectors will end March on a positive note. Long/Short Equity managers, in particular, were up 1.87% in March as industry themes and ongoing M&A activity provided stock specific opportunities, while superior stock selection paid off.” Performance for the Credit Suisse/Tremont Hedge Fund Index and its ten sub strategies is calculated monthly.
The Credit Suisse/Tremont Hedge Fund Index is comprised of 432 funds as of March 31, 2007. The Index is constructed using the Credit Suisse/Tremont database of more than 4,500 hedge funds. It includes both open and closed funds located in the U.S. and offshore, but does not include fund of funds.
16 Apr 2007
Sallie Mae Agrees to $25 Billion Buy Out
A group consisting of hedge funds JC Flowers & Co. and Friedman Fleischer & Lowe, agreed late last night to buy SLM Corp also known as or Sallie Mae, the US's largest provider of student loans, in a $25 billion deal. Also in on the deal is J.P. Morgan Chase & Co. and the Bank of America.
The idea driving the deal revolves around using financial engineering and more-efficient management to improve Sallie Mae's balance sheet. The two New York-based hedge fund firms will control 50.2% of the company, while the banks will own the rest.
Under the terms of the deal, they said, the buyers will pay $60 a share in cash, which represents almost a ५०% premium over Sallie Mae’s battered share price before news of a potential buyout was reported in The New York Times last week. The share price has surged nearly 15% on the prospect that the company could be bought out.
JC Flowers & Co is one of the largest investment funds focused solely on the financial service sector. The fund has over $900 million in commitments from financial and strategic investors. Investors in the hedge fund include ABN Amro, AIG, Banco Santander, GE, Goldman Sachs, JP Morgan Chase among others.
Friedman Fleischer & Lowe focuses on investing in middle-market companies and currently has over $1 billion in assets under management.
The idea driving the deal revolves around using financial engineering and more-efficient management to improve Sallie Mae's balance sheet. The two New York-based hedge fund firms will control 50.2% of the company, while the banks will own the rest.
Under the terms of the deal, they said, the buyers will pay $60 a share in cash, which represents almost a ५०% premium over Sallie Mae’s battered share price before news of a potential buyout was reported in The New York Times last week. The share price has surged nearly 15% on the prospect that the company could be bought out.
JC Flowers & Co is one of the largest investment funds focused solely on the financial service sector. The fund has over $900 million in commitments from financial and strategic investors. Investors in the hedge fund include ABN Amro, AIG, Banco Santander, GE, Goldman Sachs, JP Morgan Chase among others.
Friedman Fleischer & Lowe focuses on investing in middle-market companies and currently has over $1 billion in assets under management.
London Doubles its Share of Global Hedge Fund Assets
London's share of global hedge fund assets increased from 10% to 21% between 2002 and 2006, making London one of the fastest growing hedge fund centres according to the 2007 edition of IFSL's Hedge Funds report. Assets managed by hedge fund managers based in London totaled around $360bn in 2006, up 40% on the previous year, and a six-fold increase from 2002.
New York remained the leading global location for hedge fund managers in 2006 with 36% of global assets. Its share was down however, from 45% in 2002 as growth of the hedge fund industry in Europe and Asia outpaced growth in the US. This was largely a result of a rise in institutional portfolio allocation into hedge funds in these regions during this period.
London is by far the largest center for European hedge fund managers. The 900 hedge funds located in London accounted for four-fifths of European based hedge fund assets in 2006. If figures for fund of funds and US hedge funds with a trading desk in Europe are taken into account, London's share was more than 90%. Other locations for hedge fund managers in Europe include France, Spain, Sweden and Switzerland.
Factors underpinning London's strong position include its local expertise, the proximity of clients and markets, a strong asset management industry and a favorable regulatory environment. London is also a leading center for hedge fund services notably prime brokerage services offered by the leading London based investment banks. More than 90% of European prime brokerage activity is conducted through London.
New York remained the leading global location for hedge fund managers in 2006 with 36% of global assets. Its share was down however, from 45% in 2002 as growth of the hedge fund industry in Europe and Asia outpaced growth in the US. This was largely a result of a rise in institutional portfolio allocation into hedge funds in these regions during this period.
London is by far the largest center for European hedge fund managers. The 900 hedge funds located in London accounted for four-fifths of European based hedge fund assets in 2006. If figures for fund of funds and US hedge funds with a trading desk in Europe are taken into account, London's share was more than 90%. Other locations for hedge fund managers in Europe include France, Spain, Sweden and Switzerland.
Factors underpinning London's strong position include its local expertise, the proximity of clients and markets, a strong asset management industry and a favorable regulatory environment. London is also a leading center for hedge fund services notably prime brokerage services offered by the leading London based investment banks. More than 90% of European prime brokerage activity is conducted through London.
13 Apr 2007
State Street Study Shows Institutional Investment In Hedge Funds Is On The Rise
According to the 2007 State Street Hedge Fund Research Study, nearly two thirds of institutional investors are now allocating more than 5% of their portfolio to hedge fund strategies, while only 4% have no hedge fund allocation. In comparison 2005 and 2006 study results showed less than half had more than 5% allocation to hedge funds and 16% had no allocation.
Although institutional investors allocations to hedge funds are relatively small, they represent the fastest growing segment of direct investors to hedge funds.
92% of institutional investors surveyed expressed either an "increased" (52%) or "maintained" (40%) level of comfort with hedge funds over the previous 12 months. Hedge funds also earned high marks from institutions for increasing absolute portfolio returns. 65% of respondents said their hedge fund investments matched expectations for gains in the absolute return of their portfolio, up from 57% in 2006.
According to the report, hedge funds and hedging strategies are becoming an accepted part of, if not a conventional choice in, the investment portfolios of institutional investors. Hedge fund strategies are continuing to evolve and some hedge funds are adopting new business models, while some traditional investment vehicles adopt hedge fund-like characteristics, blurring the line between alternative and traditional investing.
Joseph Hooley, Vice Chairman of State Street says in the report "What we have learned from these studies, customers and industry participants is that hedge funds are becoming less "alternative" all the time...Investors are beginning to see beyond the isolated cases of fraud and mismanagement that brought negative attention to the industry," and, "We believe plan sponsors and other institutional investors will be able to successfully navigate the risks and mine the opportunities in these important investment products."
The 2007 State Street Hedge Fund Research Study was conducted with the input of global asset owners that collectively manage more than ¤1 trillion in assets, representing corporate pension plans (21%), public and government pension plans (32%) and endowments and foundations (44%).
Although institutional investors allocations to hedge funds are relatively small, they represent the fastest growing segment of direct investors to hedge funds.
92% of institutional investors surveyed expressed either an "increased" (52%) or "maintained" (40%) level of comfort with hedge funds over the previous 12 months. Hedge funds also earned high marks from institutions for increasing absolute portfolio returns. 65% of respondents said their hedge fund investments matched expectations for gains in the absolute return of their portfolio, up from 57% in 2006.
According to the report, hedge funds and hedging strategies are becoming an accepted part of, if not a conventional choice in, the investment portfolios of institutional investors. Hedge fund strategies are continuing to evolve and some hedge funds are adopting new business models, while some traditional investment vehicles adopt hedge fund-like characteristics, blurring the line between alternative and traditional investing.
Joseph Hooley, Vice Chairman of State Street says in the report "What we have learned from these studies, customers and industry participants is that hedge funds are becoming less "alternative" all the time...Investors are beginning to see beyond the isolated cases of fraud and mismanagement that brought negative attention to the industry," and, "We believe plan sponsors and other institutional investors will be able to successfully navigate the risks and mine the opportunities in these important investment products."
The 2007 State Street Hedge Fund Research Study was conducted with the input of global asset owners that collectively manage more than ¤1 trillion in assets, representing corporate pension plans (21%), public and government pension plans (32%) and endowments and foundations (44%).
The "Index" Reports Positive Hedge Fund Returns
The Greenwich Global Hedge Fund Index, one of the world's largest hedge fund databases, reported returns of +0.87% in March, closely followed by the Greenwich Investable Index returning +0.86%.
84% of the 1,025 hedge funds reporting thus far had positive returns. 16 out of 18 index strategies outperformed the S&P 500, the two exceptions being Futures and Short Selling, which together represent 10% of the Global Index. Market Neutral strategies were positive for the 17th consecutive month.
Event-Driven managers capitalized on M&A strength, returning +1.18% in March. Long-Short Equity strategies captured the upside across global equity markets, yielding +1.26%. It proved to be a difficult month for Futures managers, who were unable to recover from volatility early in the month, to end down -1.64%.
The Greenwich Investable Index has continued to achieve its investment objective of closely tracking the Global hedge fund Index, posting year-to-date returns of +2.62%--within nine basis points of the Global Index year-date +2.71%.
Both Greenwich Indices have outperformed market benchmarks year-to-date. The S&P 500, MSCI World Equity, FTSE 100, and Lehman Brothers Aggregate Bond indices posted March returns of +1.12% (+0.64% Q1), +1.59% (+2.06% Q1), +2.21% (+1.40% Q1), and 0.00% (+1.50% Q1), respectively.
The Greenwich Investable Index, comprising 51 funds, adds investability, active management and liquidity to the broad Greenwich Global Hedge Fund Index. Unlike other investable indices, it references actual hedge funds as opposed to separately managed accounts that merely attempt to replicate the returns of hedge fund vehicles. Since inception January 2003, the Investable Index posted an annualized return of +10.70% versus +11.64% for the Global Index. The Investable Index is reported monthly net of a 0.04% Index calculation fee.
84% of the 1,025 hedge funds reporting thus far had positive returns. 16 out of 18 index strategies outperformed the S&P 500, the two exceptions being Futures and Short Selling, which together represent 10% of the Global Index. Market Neutral strategies were positive for the 17th consecutive month.
Event-Driven managers capitalized on M&A strength, returning +1.18% in March. Long-Short Equity strategies captured the upside across global equity markets, yielding +1.26%. It proved to be a difficult month for Futures managers, who were unable to recover from volatility early in the month, to end down -1.64%.
The Greenwich Investable Index has continued to achieve its investment objective of closely tracking the Global hedge fund Index, posting year-to-date returns of +2.62%--within nine basis points of the Global Index year-date +2.71%.
Both Greenwich Indices have outperformed market benchmarks year-to-date. The S&P 500, MSCI World Equity, FTSE 100, and Lehman Brothers Aggregate Bond indices posted March returns of +1.12% (+0.64% Q1), +1.59% (+2.06% Q1), +2.21% (+1.40% Q1), and 0.00% (+1.50% Q1), respectively.
The Greenwich Investable Index, comprising 51 funds, adds investability, active management and liquidity to the broad Greenwich Global Hedge Fund Index. Unlike other investable indices, it references actual hedge funds as opposed to separately managed accounts that merely attempt to replicate the returns of hedge fund vehicles. Since inception January 2003, the Investable Index posted an annualized return of +10.70% versus +11.64% for the Global Index. The Investable Index is reported monthly net of a 0.04% Index calculation fee.
12 Apr 2007
Hedge Fund Manager To Launch Multi-Strategy China Fund
UG Investment Advisers, a hedge fund manager with over $500 million invested in China's Qualified Foreign Institutional Investor program, has announced that they are looking to raise $200, to $500 million more for the launch of a Greater China multi-strategy hedge fund, a senior executive with the firm said in a Reuters interview.
UG Investment Advisers has six main hedge fund vehicles, including the UG Formosa Patriot Fund, UG Formosa Multi-Strategy Fund, UG Great Wall Hidden Value Fund, UG-Adwell Great Wall Absolute Return Fund, UG Hidden Dragon Balance Fund and UG Hidden Dragon Undervalued Assets Fund. The new vehicle's strategies would include looking for arbitrage opportunities in closed-end funds listed in mainland China, said Richard Fan, a partner and director with the $900 million hedge fund manager.
"It's in the very preliminary stages right now. If it does proceed and go forward it will probably launch in the next three months or so," he told the Reuters Hedge Funds and Private Equity Summit in Singapore. Fan said UG wants to launch a new multistrategy fund because the Formosa vehicle is currently about 70 percent invested in Taiwan, and the firm wants the flexibility to put a greater percentage of assets to work in mainland China.
The new fund would be focused on investing in China's more than 50 closed-end funds, which typically list on an exchange and trade like stocks. While Asia-focused hedge fund assets have risen six-fold over the past five years, rising more than 30 percent last year alone, Fan said UG is not overly concerned about competition when it comes to closed-end fund arbitrage strategy in China.
UG Investment Advisers has six main hedge fund vehicles, including the UG Formosa Patriot Fund, UG Formosa Multi-Strategy Fund, UG Great Wall Hidden Value Fund, UG-Adwell Great Wall Absolute Return Fund, UG Hidden Dragon Balance Fund and UG Hidden Dragon Undervalued Assets Fund. The new vehicle's strategies would include looking for arbitrage opportunities in closed-end funds listed in mainland China, said Richard Fan, a partner and director with the $900 million hedge fund manager.
"It's in the very preliminary stages right now. If it does proceed and go forward it will probably launch in the next three months or so," he told the Reuters Hedge Funds and Private Equity Summit in Singapore. Fan said UG wants to launch a new multistrategy fund because the Formosa vehicle is currently about 70 percent invested in Taiwan, and the firm wants the flexibility to put a greater percentage of assets to work in mainland China.
The new fund would be focused on investing in China's more than 50 closed-end funds, which typically list on an exchange and trade like stocks. While Asia-focused hedge fund assets have risen six-fold over the past five years, rising more than 30 percent last year alone, Fan said UG is not overly concerned about competition when it comes to closed-end fund arbitrage strategy in China.
State Street Hedge Fund Report
State Street Corporation, the world’s leading provider of financial services to institutional investors, released a report on hedge funds as part of its series of proprietary reports designed to advance the dialogue around key themes and trends within the financial services industry.
The new Vision paper on hedge funds offers a comprehensive overview of the impact of rising institutional allocations to alternative investment vehicles and the implications of this trend for institutions and the hedge fund industry going forward. State Street’s report provides insightful explanations of hedge fund investing trends and techniques, as well as an in-depth analysis of the evolution of risk management, new developments in the pursuit of alpha, and a global review of hedge fund regulation.
"As part of the ongoing series designed to provide the industry with timely insights, this Vision paper responds to a need for greater understanding of all aspects of hedge fund investing," said Jay Hooley, vice chairman of State Street. "Given the results of our third institutional hedge fund study released last month, it is evident that institutional hedge fund investing is becoming less ‘alternative.’ We hope this new report will help industry professionals enhance their knowledge of hedge funds and navigate the risk and opportunities available in these important investment products."
The report draws on State Street’s extensive insights from across the company to bring a unique insight into the hedge fund industry.
State Street Global Advisors, State Street’s investment management arm, has two decades of absolute return investment expertise and offers an array of strategies focused on generating alpha.
Through its acquisition of International Fund Services (IFS) in 2002, State Street significantly expanded its global hedge fund servicing capabilities and now administers more than $200 billion in hedge fund assets from servicing centers in New York, Dublin, Luxembourg and Toronto.
The new Vision paper on hedge funds offers a comprehensive overview of the impact of rising institutional allocations to alternative investment vehicles and the implications of this trend for institutions and the hedge fund industry going forward. State Street’s report provides insightful explanations of hedge fund investing trends and techniques, as well as an in-depth analysis of the evolution of risk management, new developments in the pursuit of alpha, and a global review of hedge fund regulation.
"As part of the ongoing series designed to provide the industry with timely insights, this Vision paper responds to a need for greater understanding of all aspects of hedge fund investing," said Jay Hooley, vice chairman of State Street. "Given the results of our third institutional hedge fund study released last month, it is evident that institutional hedge fund investing is becoming less ‘alternative.’ We hope this new report will help industry professionals enhance their knowledge of hedge funds and navigate the risk and opportunities available in these important investment products."
The report draws on State Street’s extensive insights from across the company to bring a unique insight into the hedge fund industry.
State Street Global Advisors, State Street’s investment management arm, has two decades of absolute return investment expertise and offers an array of strategies focused on generating alpha.
Through its acquisition of International Fund Services (IFS) in 2002, State Street significantly expanded its global hedge fund servicing capabilities and now administers more than $200 billion in hedge fund assets from servicing centers in New York, Dublin, Luxembourg and Toronto.
10 Apr 2007
Citigroup In Talks Over $600m Hedge Fund Buy Out
Citigroup has been in talks with year-old hedge fund Old Lane, with a plan to spend $600m on the acquisition of the hedge fund. At an estimated 45% gross margin on $150 million in revenue, the hedge fund could clear $67.5 million.
Ex-Morgan Stanley money manager, Vikram Pandit, founder of Old Lane Management has heavily invested in Indian securities, real estate and infrastructure projects.Citigroup would add about $4 billion in assets under management in the deal, and would make Pandit chief executive of its alternative investments unit.
Launched early last year, Old Lane has between $150 million and $160 million in revenue, based on a 2% management fee and 20% share of any profit formula. In its first full year of business the hedge fund returned around 10% to investors.
The alternative investments unit is the smallest of Citigroup's four main businesses, with about 875 employees. It has $49.2 billion of private equity, hedge fund, real estate and other assets, including $10.7 billion of Citigroup's own money.
Ex-Morgan Stanley money manager, Vikram Pandit, founder of Old Lane Management has heavily invested in Indian securities, real estate and infrastructure projects.Citigroup would add about $4 billion in assets under management in the deal, and would make Pandit chief executive of its alternative investments unit.
Launched early last year, Old Lane has between $150 million and $160 million in revenue, based on a 2% management fee and 20% share of any profit formula. In its first full year of business the hedge fund returned around 10% to investors.
The alternative investments unit is the smallest of Citigroup's four main businesses, with about 875 employees. It has $49.2 billion of private equity, hedge fund, real estate and other assets, including $10.7 billion of Citigroup's own money.
Carlyle Group to Launch Hedge Fund Business
Private equity firm Carlyle Group is launching a $1 billion hedge fund called Carlyle Multi Strategy Partners, the fund is said to have a wide-ranging investment strategy.
Last year, the $56 billion firm hired 2 new managers to head up a hedge fund business called Carlyle Blue Wave and has since put together a team of 55 for the unit. Carlyle, based in Washington, D.C., declined to comment on the timing of the hedge fund's launch.
There has been a global rush of investment dollars into lightly regulated private partnerships such as private-equity firms and hedge funds. Private-equity firms use client funds to buy companies, take them private, restructure them, and sell them again, typically three to five years later. Hedge funds, by contrast, use clients' money to invest in a variety of securities and investments, frequently trading very actively and quickly in public markets.
Carlyle Group has over 400 investment professionals operating out of offices in 18 countries to uncover opportunities in North America, Europe, Asia, Australia and Africa. Carlyle has investments in 48 funds, including buyouts, venture capital, real estate and leveraged finance, they are also reported to be considering investing in renewable energy infrastructure.
Last year, the $56 billion firm hired 2 new managers to head up a hedge fund business called Carlyle Blue Wave and has since put together a team of 55 for the unit. Carlyle, based in Washington, D.C., declined to comment on the timing of the hedge fund's launch.
There has been a global rush of investment dollars into lightly regulated private partnerships such as private-equity firms and hedge funds. Private-equity firms use client funds to buy companies, take them private, restructure them, and sell them again, typically three to five years later. Hedge funds, by contrast, use clients' money to invest in a variety of securities and investments, frequently trading very actively and quickly in public markets.
Carlyle Group has over 400 investment professionals operating out of offices in 18 countries to uncover opportunities in North America, Europe, Asia, Australia and Africa. Carlyle has investments in 48 funds, including buyouts, venture capital, real estate and leveraged finance, they are also reported to be considering investing in renewable energy infrastructure.
9 Apr 2007
CBB Sets Up Hedge Fund Regulations
The Central Bank of Bahrain (CBB) is finalizing new regulations that they hope will open up the development of a regional industry of hedge funds, derivatives and other alternative investment instruments.
Requirements for the registration of such higher risk and volatile instruments in Bahrain are contained in a new regulatory framework for collective investment undertakings (CIUs), which the CBB plans to issue later this month.
The new framework, which updates regulations governing mutual funds, will also introduce Bahrain's first-ever rules allowing CIUs targeting professional investors. It will permit exempt schemes subject only to limited regulation (such as hedge funds), but which may only be sold to a high net worth institutional and investor base.
At present, Bahrain leads the region as a hedge fund center, with over 2,000 authorised funds, including over 100 locally domiciled funds. The new CIU regulations will further enhance and develop the market, by allowing a much broader range of CIU to be domiciled and offered in Bahrain, all within a credible regulatory framework.
The new framework will create a new category of "Exempt" schemes. These schemes will be required only to register with the CBB, rather than be authorized, and will not be subject to on-going supervision. They will not be regulated, but may only be sold to a restricted investor base;- those able to make a minimum investment of US$100,000, and with at least US$1 million in financial assets, and subject to verification by the institution selling the product that the investor fully understands the risks involved.
The rules for Exempt schemes will allow hedge funds and other higher risk alternative investment vehicles to be legally domiciled and/or sold in Bahrain, within an appropriate regime that recognizes the sophistication of this limited investor base.
"Currently, Middle East investors have to look overseas for such products. The CBB regulations, however, will enable regional access to such instruments." said Mr. Al Baker, Executive Director at the CBB, whose responsibilities include the supervision of CIUs.
Requirements for the registration of such higher risk and volatile instruments in Bahrain are contained in a new regulatory framework for collective investment undertakings (CIUs), which the CBB plans to issue later this month.
The new framework, which updates regulations governing mutual funds, will also introduce Bahrain's first-ever rules allowing CIUs targeting professional investors. It will permit exempt schemes subject only to limited regulation (such as hedge funds), but which may only be sold to a high net worth institutional and investor base.
At present, Bahrain leads the region as a hedge fund center, with over 2,000 authorised funds, including over 100 locally domiciled funds. The new CIU regulations will further enhance and develop the market, by allowing a much broader range of CIU to be domiciled and offered in Bahrain, all within a credible regulatory framework.
The new framework will create a new category of "Exempt" schemes. These schemes will be required only to register with the CBB, rather than be authorized, and will not be subject to on-going supervision. They will not be regulated, but may only be sold to a restricted investor base;- those able to make a minimum investment of US$100,000, and with at least US$1 million in financial assets, and subject to verification by the institution selling the product that the investor fully understands the risks involved.
The rules for Exempt schemes will allow hedge funds and other higher risk alternative investment vehicles to be legally domiciled and/or sold in Bahrain, within an appropriate regime that recognizes the sophistication of this limited investor base.
"Currently, Middle East investors have to look overseas for such products. The CBB regulations, however, will enable regional access to such instruments." said Mr. Al Baker, Executive Director at the CBB, whose responsibilities include the supervision of CIUs.
Rivals to Bid in Hedge Fund Driven Dutch Bank Sale
The Royal Bank of Scotland Group and Spanish bank Grupo Santander Central Hispano of Madrid are combining their efforts to counter bid Barclays in the hedge fund driven sale of Dutch bank ABN.
ABN Amro Holding was in preliminary discussions with Barclays about creating a company worth more than $177 billion, this would be a record deal in the financial sector. In March hedge fund TCI announced in a letter to Dutch bank ABN Amro that they believe the bank is undervalued and should sell some of its assets, merge with another bank, or even sell off the whole business.
Activist hedge funds and shareholders Polygon and Centaurus backed up TCI's demands by increasing their stakes in ABN in order to pressure the bank into the sale. According to a British newspaper report, the offer could be presented immediately after Barclays makes a formal bid for the bank and would involve a break-up of the Dutch bank.
In 2005 TCI was part of a group of activist investors who criticized Deutsche Börse for its $2.5 billion bid for the London Stock Exchange, eventually causing Werner Seifert, the chief executive to resign. It turns out TCI, which owned 8% of Deutsche Börse, actively recruited some powerful partners, including Atticus Capital, Merrill Lynch, and Fidelity Investments, in order to facilitate the move.
Centaurus is one of the activist shareholders that was embroiled in a dispute with Dutch companies Stork NV and Royal Ahold NV last year, and Polygon Investment Partners is a British equity fund that was involved in the sale of Dutch publisher VNU.
ABN Amro Holding was in preliminary discussions with Barclays about creating a company worth more than $177 billion, this would be a record deal in the financial sector. In March hedge fund TCI announced in a letter to Dutch bank ABN Amro that they believe the bank is undervalued and should sell some of its assets, merge with another bank, or even sell off the whole business.
Activist hedge funds and shareholders Polygon and Centaurus backed up TCI's demands by increasing their stakes in ABN in order to pressure the bank into the sale. According to a British newspaper report, the offer could be presented immediately after Barclays makes a formal bid for the bank and would involve a break-up of the Dutch bank.
In 2005 TCI was part of a group of activist investors who criticized Deutsche Börse for its $2.5 billion bid for the London Stock Exchange, eventually causing Werner Seifert, the chief executive to resign. It turns out TCI, which owned 8% of Deutsche Börse, actively recruited some powerful partners, including Atticus Capital, Merrill Lynch, and Fidelity Investments, in order to facilitate the move.
Centaurus is one of the activist shareholders that was embroiled in a dispute with Dutch companies Stork NV and Royal Ahold NV last year, and Polygon Investment Partners is a British equity fund that was involved in the sale of Dutch publisher VNU.
8 Apr 2007
Hedge Fund Investors of Tommorow Compete
Over 2,000 post-secondary students acted as hedge fund managers for the InvestYoung National University Stock Market Competition which ran from October 16, 2006 to March 9, 2007. Approximately 20,000 trades were executed on over 2,800 symbols across all major North American markets.
All ten finalists posted returns that more than doubled the performance of the RBC Capital Markets Hedge 250 Index, which is a representative benchmark of hedge fund performance. The most actively traded securities were Apple, Google, Microsoft, Yahoo! and Sony.
Students were given the opportunity to invest a simulated portfolio of $1,000,000 Canadian (US $869,000) in securities traded on major North American exchanges.
Jason Mah, 26, a fourth year student attending University of Victoria triumphed in the competition. He placed first with a final portfolio value of $1,451,619 representing a 45% return on investment. His strategy was to invest in distressed companies ahead of quarterly earnings announcements. Mah notes, "It is important to always look out for opportunities. I had an incredible time networking and discussing strategies with competitors across the nation." Mah is graduating in the fall with a Bachelor of Economics and looks forward to working on Wall Street.
The InvestYoung Online Stock Market Competition is Investors of Tomorrow's flagship program allowing students to learn about money management through hands-on experience managing a virtual investment portfolio. Investors of Tomorrow also operates a keynote speaker series that has brought some of Canada's most prominent financial industry leaders back into the classroom.
All ten finalists posted returns that more than doubled the performance of the RBC Capital Markets Hedge 250 Index, which is a representative benchmark of hedge fund performance. The most actively traded securities were Apple, Google, Microsoft, Yahoo! and Sony.
Students were given the opportunity to invest a simulated portfolio of $1,000,000 Canadian (US $869,000) in securities traded on major North American exchanges.
Jason Mah, 26, a fourth year student attending University of Victoria triumphed in the competition. He placed first with a final portfolio value of $1,451,619 representing a 45% return on investment. His strategy was to invest in distressed companies ahead of quarterly earnings announcements. Mah notes, "It is important to always look out for opportunities. I had an incredible time networking and discussing strategies with competitors across the nation." Mah is graduating in the fall with a Bachelor of Economics and looks forward to working on Wall Street.
The InvestYoung Online Stock Market Competition is Investors of Tomorrow's flagship program allowing students to learn about money management through hands-on experience managing a virtual investment portfolio. Investors of Tomorrow also operates a keynote speaker series that has brought some of Canada's most prominent financial industry leaders back into the classroom.
5 Apr 2007
Alea Group Agrees to Hedge Fund Takeover
Alternative asset manager Fortress Investment Group has announced plans to buy up re-insurance company Alea Group Holdings for £162 million. ($319.6 million)
"The independent directors are pleased to recommend the acquisition, which results from the strategy that management have pursued over recent months to bring greater stability to the company," Chairman of Alea, John Reeve said in a statement.
Alea put itself up for sale in 2005 following $0.8 million in record storm losses in 2005, down from $178.9 million the year before. Net premium revenue fell to $215.9 million from $1.087 billion due to a decision to cease writing new business.
Fortress said it would pay 93 pence a share in cash, 1.1% less than Alea's closing price Tuesday but a 15% premium over its average price for the past six months. That would value the offer at $320 million.
Fortress Investment Group is a global hedge fund investor with over $30 billion in assets. Headquartered in New York the company has affiliates with offices in Dallas, Frankfurt, Geneva, Hong Kong, London, Los Angeles, Rome, San Diego, Sydney and Toronto. Fortress raises, invests and manages private equity funds, hedge funds and publicly traded alternative investment vehicles.
"The independent directors are pleased to recommend the acquisition, which results from the strategy that management have pursued over recent months to bring greater stability to the company," Chairman of Alea, John Reeve said in a statement.
Alea put itself up for sale in 2005 following $0.8 million in record storm losses in 2005, down from $178.9 million the year before. Net premium revenue fell to $215.9 million from $1.087 billion due to a decision to cease writing new business.
Fortress said it would pay 93 pence a share in cash, 1.1% less than Alea's closing price Tuesday but a 15% premium over its average price for the past six months. That would value the offer at $320 million.
Fortress Investment Group is a global hedge fund investor with over $30 billion in assets. Headquartered in New York the company has affiliates with offices in Dallas, Frankfurt, Geneva, Hong Kong, London, Los Angeles, Rome, San Diego, Sydney and Toronto. Fortress raises, invests and manages private equity funds, hedge funds and publicly traded alternative investment vehicles.
4 Apr 2007
Electronic Tracking For Cayman Domiciled Funds In Place
As domicile for approximately 80% of the world's hedge funds, the Cayman Islands have now implemented a mechanism for the electronic submission of annual returns for all funds licensed, registered and administered in the Cayman Islands.
The Cayman Islands Monetary Authority's (CIMA) Managing Director Cindy Scotland said, "Not only will we be able to more efficiently handle the audited accounts that are submitted but we will be in a position to provide better aggregate industry statistics than we have been able to provide so far. This will benefit all stakeholders." and "Because the Cayman Islands is the domicile for a majority of the world’s offshore hedge funds, we believe CIMA’s E-reporting system will be able to improve the reliability and quality of aggregate fund industry statistics globally".
Following successful industry testing, CIMA released on its website the electronic Fund Annual Return (FAR) form and has opened the internet portal through which funds’ local auditors will submit the required returns. Related guidance notes have also been released.
CIMA has been developing the electronic reporting initiative for funds for several months, with assistance from its retained business advisor Ernst & Young and with input from the funds industry. The Monetary Authority expects the initiative to facilitate more efficient collection and processing of returns from the over 8,300 funds it now oversees.
The legislation implementing E-reporting for funds, the Mutual Funds (Annual Returns) Regulations 2006, was passed on 27 December 2006.
The Cayman Islands Monetary Authority's (CIMA) Managing Director Cindy Scotland said, "Not only will we be able to more efficiently handle the audited accounts that are submitted but we will be in a position to provide better aggregate industry statistics than we have been able to provide so far. This will benefit all stakeholders." and "Because the Cayman Islands is the domicile for a majority of the world’s offshore hedge funds, we believe CIMA’s E-reporting system will be able to improve the reliability and quality of aggregate fund industry statistics globally".
Following successful industry testing, CIMA released on its website the electronic Fund Annual Return (FAR) form and has opened the internet portal through which funds’ local auditors will submit the required returns. Related guidance notes have also been released.
CIMA has been developing the electronic reporting initiative for funds for several months, with assistance from its retained business advisor Ernst & Young and with input from the funds industry. The Monetary Authority expects the initiative to facilitate more efficient collection and processing of returns from the over 8,300 funds it now oversees.
The legislation implementing E-reporting for funds, the Mutual Funds (Annual Returns) Regulations 2006, was passed on 27 December 2006.
3 Apr 2007
SkyBridge Capital Invests in IronShield Hedge Fund
New York based hedge fund investor SkyBridge Capital, announced plans to invest in Ironshield Capital Management, a London-based hedge fund scheduled to launch later this year.
Ironshield Capital Management is the latest in a series of investments that SkyBridge has made in up and coming hedge funds. Other hedge funds they have arranged financing for include Westport Capital Partners, Brompton Cross Capital Advisers, Abdiel Capital and Outpoint Capital Management.
SkyBridge will provide Ironshield with a team of people to help build up the new fund's operation. The amount of the investment was not disclosed. Ironshield is led by David Nazar, previously a principal at Bank of America in London.
SkyBridge Capital is a seeding firm created in 2005 by Anthony Scaramucci, co-founder of Oscar Capital, a hedge fund acquired in 2001 by Neuberger Berman; and Andrew Klein, co-founder of Soleil Securities Group.
Ironshield Capital Management is the latest in a series of investments that SkyBridge has made in up and coming hedge funds. Other hedge funds they have arranged financing for include Westport Capital Partners, Brompton Cross Capital Advisers, Abdiel Capital and Outpoint Capital Management.
SkyBridge will provide Ironshield with a team of people to help build up the new fund's operation. The amount of the investment was not disclosed. Ironshield is led by David Nazar, previously a principal at Bank of America in London.
SkyBridge Capital is a seeding firm created in 2005 by Anthony Scaramucci, co-founder of Oscar Capital, a hedge fund acquired in 2001 by Neuberger Berman; and Andrew Klein, co-founder of Soleil Securities Group.
European Mutuals Push For Hedge Fund Access
European mutual fund managers are pushing regulators to allow them to buy into derivatives of hedge fund indexes.
Approval from regulators would allow European Union-regulated funds to put some of their $7.3 trillion of assets into derivatives tracking the hedge fund indexes, allowing them to profit from hedge fund gains in a safer, regulated way.
Relatively few hedge funds are actually domiciled in European countries, so that although their use has been fairly widespread amongst institutional investors for some time, they have been limited to high net worth individuals able to pay the high minimum initial investments that are often in place.
Fund industry representatives argued in front of the Committee of European Securities Regulators that indexes linked to hedge funds performance have increasingly become standard financial indicators.
Although ruled unsuitable for mutual funds last year, the mutual funds are pushing to be allowed to bet on the performance of hedge funds just as they can for other financial indicators such as stock indexes.
"These are a class of assets that retail investors could benefit from," said Stephane Kuzmin, responsible for regulatory matters for index-linked funds at Barclays Global Investors Ltd., the hedge-fund arm of Barclays Plc, at the hearing. "We'd welcome to have some hedge-fund indices available."
The EU executive agency in Brussels may consider broadening those rights to permit buying of funds of hedge funds when it considers future rule revisions.
European countries including Germany, Spain and the U.K. have permitted limited investment in funds of hedge funds or other means of investing in the vehicles traditionally restricted to institutional investors or people with $1 million or more.
Approval from regulators would allow European Union-regulated funds to put some of their $7.3 trillion of assets into derivatives tracking the hedge fund indexes, allowing them to profit from hedge fund gains in a safer, regulated way.
Relatively few hedge funds are actually domiciled in European countries, so that although their use has been fairly widespread amongst institutional investors for some time, they have been limited to high net worth individuals able to pay the high minimum initial investments that are often in place.
Fund industry representatives argued in front of the Committee of European Securities Regulators that indexes linked to hedge funds performance have increasingly become standard financial indicators.
Although ruled unsuitable for mutual funds last year, the mutual funds are pushing to be allowed to bet on the performance of hedge funds just as they can for other financial indicators such as stock indexes.
"These are a class of assets that retail investors could benefit from," said Stephane Kuzmin, responsible for regulatory matters for index-linked funds at Barclays Global Investors Ltd., the hedge-fund arm of Barclays Plc, at the hearing. "We'd welcome to have some hedge-fund indices available."
The EU executive agency in Brussels may consider broadening those rights to permit buying of funds of hedge funds when it considers future rule revisions.
European countries including Germany, Spain and the U.K. have permitted limited investment in funds of hedge funds or other means of investing in the vehicles traditionally restricted to institutional investors or people with $1 million or more.
2 Apr 2007
Hedge Fund To Separate Brokerage Arm to New York
Top ten hedge fund firm Man Group said on Friday it is considering splitting off its brokerage arm into a new £2 billion ($3.9 billion) company. The de-merger would separate its U.S. brokerage unit and list it in New York.
Man group has funds under management of more than $61 billion as of January. The listing of a majority interest in the unit, Man Financial, will take place in the third quarter of 2007, subject to market conditions remaining favorable, the firm said. It will be renamed MF Global following the separation, which is subject to shareholder approval, and net proceeds will be returned to shareholders later in the year.
A Man Group spokesman said; "Man regularly reviews the structure of its business, in line with our commitment to achieve superior returns for our shareholders...... Separation will allow each business to focus even more effectively on their separate growth strategies and take advantage of the significant business development opportunities in each of their industries."
Man Group, best-known for its hedge fund activities, believes its brokerage business is being overlooked and would be worth far more as a separate company. Man Financial's Managing Director Kevin Davis will become CEO of the new group. Chris Smith will be chief operating officer and deputy CEO, while Amy Butte will be chief financial officer. The non-executive chairman will be Alison Carnwath.
Man group has funds under management of more than $61 billion as of January. The listing of a majority interest in the unit, Man Financial, will take place in the third quarter of 2007, subject to market conditions remaining favorable, the firm said. It will be renamed MF Global following the separation, which is subject to shareholder approval, and net proceeds will be returned to shareholders later in the year.
A Man Group spokesman said; "Man regularly reviews the structure of its business, in line with our commitment to achieve superior returns for our shareholders...... Separation will allow each business to focus even more effectively on their separate growth strategies and take advantage of the significant business development opportunities in each of their industries."
Man Group, best-known for its hedge fund activities, believes its brokerage business is being overlooked and would be worth far more as a separate company. Man Financial's Managing Director Kevin Davis will become CEO of the new group. Chris Smith will be chief operating officer and deputy CEO, while Amy Butte will be chief financial officer. The non-executive chairman will be Alison Carnwath.
French Candidate Disapproves of Hedge Fund Strategies
French Interior Minister and presidential candidate Nicolas Sarkozy criticized hedge funds as an example of undesirable speculation, saying he didn't approve of companies...."that buy up a company, sell it off in pieces, sack 25% of the staff in the meantime, collect 25% profit and create zero wealth."
Sarkozy said, "I don't want a speculative capitalism. I want a capitalism that creates riches." He added that a second topic for European debate would be "moralizing" the region's model of financial capitalism. Speaking during a television debate he argued that a weaker Euro should be a tool to help European industry: "We've built the second currency in the world and we're the only region in the world that obstinately refuses to put our currency to the service of jobs and growth. It can't last," he said.
Sarkozy is widely viewed by admirers as France's best hope for economic reform, but he has sought to temper a reputation for unpopular liberalism by emphasizing the role of the state and leaping to the defense of French industrial champions. In common with other French politicians, he has also called repeatedly for a change in the European Central Bank's mandate, to include growth and jobs among its criteria when setting interest rates.
On Sunday, he accepted that those demands, requiring unanimous agreement, were unrealistic. But said that if elected, he would ask his finance minister to call a Eurogroup meeting with Eurozone colleagues to discuss exchange rate strategy and "convince our partners to move forward."
Sarkozy said, "I don't want a speculative capitalism. I want a capitalism that creates riches." He added that a second topic for European debate would be "moralizing" the region's model of financial capitalism. Speaking during a television debate he argued that a weaker Euro should be a tool to help European industry: "We've built the second currency in the world and we're the only region in the world that obstinately refuses to put our currency to the service of jobs and growth. It can't last," he said.
Sarkozy is widely viewed by admirers as France's best hope for economic reform, but he has sought to temper a reputation for unpopular liberalism by emphasizing the role of the state and leaping to the defense of French industrial champions. In common with other French politicians, he has also called repeatedly for a change in the European Central Bank's mandate, to include growth and jobs among its criteria when setting interest rates.
On Sunday, he accepted that those demands, requiring unanimous agreement, were unrealistic. But said that if elected, he would ask his finance minister to call a Eurogroup meeting with Eurozone colleagues to discuss exchange rate strategy and "convince our partners to move forward."
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