Hedge Fund ''Landmine'' Conference

Thompson Hine LLP, a leading national business law firm, will present a seminar to help hedge fund organizers, managers and advisors identify and avoid common pitfalls. “Fiduciary Landmines in Organizing and Operating Hedge Funds” is a free seminar open to hedge fund industry professionals and will be held at the Palmer House Hilton in Chicago on May 17 from noon to 4:15 p.m. CDT.

Hedge Fund Innovator Joel Press of Morgan Stanley Will Deliver Keynote: “Emerging Trends in a Newly Scrutinized Industry”

The seminar focuses on how to identify and resolve fiduciary issues in structuring and operating hedge funds. The program is structured to provide valuable insight into the obligations of alternative asset managers. It is geared to hedge fund managers, compliance professionals and vendors who provide services to the hedge fund industry.

In addition to Joel Press of Morgan Stanley, other speakers and panelists will include Howard Altman, Co-Managing Principal at Rothstein Kass, a leading accounting firm for hedge funds; Scott Richter, Managing Director and Associate General Counsel, JPMorgan; Sam Weiser, former Managing Director, Citigroup; Douglas Squassoni, Vice President and Senior Counsel, Mellon Bank; Aaron Vermut, Chief Operating Officer, Merlin Securities; and Thomas Feher, Partner, Thompson Hine.

“The hedge fund industry is at a crossroads, and confusion about the potential for increased oversight is making it an ongoing challenge for the industry to anticipate emerging issues,” said Richard Heller, a partner in the investment management practice at Thompson Hine in New York, who is organizing the conference. “This seminar will help put things into perspective for current hedge fund managers, as well as those considering establishing alternative investment funds. Fiduciary landmines abound. Knowing where and how to deal with them is key.”

Conference topics include:
* “Issues of Interest to Alternative Asset Fund Managers”
* Luncheon Keynote: “Emerging Trends in a Newly Scrutinized Industry”
* “Issues to Consider When Structuring a Hedge Fund and Soliciting Investors”
* “Fiduciary Aspects of Running a Hedge Fund”

While hedge funds are no longer required to register with the SEC, the rules that govern how brokers use their “soft dollar” commissions are designed to prevent abuses, such as payment for meals, rent, travel and other expenses not directly attributable to investment decisions. Additionally, the SEC is reviewing a change to the accredited investor rule which may have implications for the hedge fund industry.

The seminar is free and open to hedge fund industry professionals. Registry online by May 7.

Thompson Hine’s May 17 hedge fund landmine seminar will be followed at 5:30 p.m. by The Fifth Annual “Open Your Heart to Children” benefit held by the Chicago chapter of Hedge Funds Care at the Millennium Park Rooftop Terrace.

Court Of Baltimore Rules Against Costa Brava Hedge Fund

The Circuit Court for Baltimore City has, for the third time in just over a year, denied legal motions filed against Telos Corporation by Costa Brava Partnership III, L.P., a Boston-based hedge fund. Costa Brava previously had two motions for receivership dismissed or denied, and a motion for preliminary injunction regarding the sale of assets dismissed.

John B. Wood, CEO of Telos said, “As we said in our memorandum to the court, Costa Brava clearly refuses to take no for an answer. Not satisfied that their stock value has increased by nearly 200% in less than two years, Costa Brava wants to litigate even higher returns, an act that could have detrimental effects on our other shareholders and our employees.”

The activist hedge fund was demanding that Telos be prohibited from pursuing or closing any sale of assets until after May 31, 2007. That is the date that Costa Brava hopes to elect two new Class D directors of their choosing to the Telos Board of Directors.

Costa Brava and Telos are scheduled to meet on May 31 to discuss the election of two Class D directors. Costa Brava was previously given an opportunity to elect Class D directors, but failed to pursue that opportunity. The Court recognized Costa Brava’s “earlier reluctance” to fill the directorships and found that the Telos was “not in violation of any statutory, charter or by-law requirements with respect to the pending election of those directors.”

The same Court has in the past has addressed several claims by the activist hedge fund, including a recent opinion regarding Costa Brava’s demand that Telos be placed into receivership.

Wood said that Telos, whose stock over the past five years has outperformed the NASDAQ composite by 100%, “is committed to treating all shareholders equitably and continuing to focus on our role as a trusted provider of security solutions to U.S. government agencies and the Department of Defense.”

$91.16 Billion Hedge Fund Driven Bank Merger To Go Through

The Managing Board and Supervisory Board of ABN AMRO Holding N.V. and the Board of Directors of Barclays PLC announced jointly this morning that agreement has been reached on the combination of ABN AMRO and Barclays for $91.16 billion, in the world's largest bank takeover.

In March hedge fund and major shareholder 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. ABN Amro is due to hold a shareholder meeting this week and each of the Boards has unanimously resolved to recommend this new transaction to its respective shareholders. The holding company of the combined group will be called Barclays PLC.

The merger was expected to be completed during the fourth quarter of this year, the banks said. As part of the deal, ABN Amro announced it was selling its U.S. unit, LaSalle Bank, to Bank of America Corp. for $21 billion in cash. Under the deal announced Monday, Barclays offered 36.25 euros ($49.25) for each ABN Amro share, slightly below Friday's closing price of 36.29 euros ($49.38).

"The proposed merger of ABN Amro and Barclays will create a strong and competitive combination for its clients with superior products and extensive distribution," the banks said in a statement. "The merged group is expected to generate significant and sustained future incremental earnings growth for shareholders."

Barclays CEO John Varley said the hedge fund shareholders faced a stark choice: Either deconstruct ABN Amro by opting for the competing consortium's bid, or form one of the world's largest banks by accepting Barclays takeover. TCI, the hedge fund that pushed for the bank's breakup, said it was studying the proposed deal.

5th Annual Hedge Fund Industry Award Nominees

Alternative Investment News, a publication of Institutional Investor News covering the global hedge fund industry, has announced the nominees for the 5th Annual Hedge Fund Industry Awards. The awards recognize the hedge fund leaders, managers and investors who have made significant impacts on the hedge fund industry in the past year. Winners will be announced and awarded at an annual gala dinner on June 27, 2007, at New York City's historic Gotham Hall.

Nominees in all categories were selected by the editors of Alternative Investment News based on their accomplishments during the 2006 calendar year.

Lifetime Achievement award winner:
Guy Wyser-Pratte, President, Wyser Pratte & Company

Nominees:

Hedge Fund Leader of the Year:
Absolute Capital Management
Citadel Investment Group
Bulldog Investors
Fortress Investment Group

Fund of Funds Leader of the Year:
Cadogan Management
Dorchester Capital
Eden Rock Capital Management
Harcourt Investment Consulting

Hedge Fund Launch of the Year:
Kohlberg Kravis Roberts
MatlinPatterson Asset Management
Montrica Investment Management
Oceanwood Capital Management
Paulson Credit Opportunities

Emerging Manager of the Year:
ARCIM Advisors
Hudson Bay Capital Management
MKM Longboat Advisors
Rasmala Investments

Institutional Manager of the Year:
Lyxor Asset Management
Martin Currie Investment Management
Morgan Stanley
Robeco Group

Nonprofit Investor of the Year:
Bowdoin College
MIT Investment Management Company (MIT IMC)
Macarthur Foundation

Public Pension Fund Investor of the Year:
New Jersey State Investment Council
ABP
California Public Employees Retirement System
Ontario Teachers' Pension Plan


Corporate Pension Fund Investor of the Year:
Weyerhaeuser
BT and Hermes Pensions Management
General Motors Investment Management (GMIMCo)

More at;
http://www.iialternatives.com

G7 To Discuss Hedge Fund Oversight

E.U. Finance Ministers are planning to push for more oversight of hedge funds at this week's Group of 7 meeting in Berlin, the G7 has welcomed the contribution of hedge funds to market liquidity but still see investor protection as an issue.

Industry-led measures could include reporting trades to watchdogs to stamp out possible market abuse. The Alternative Investment Management Association, a global lobby, said a voluntary code was acceptable in principle, but how it would be enforced was unclear.

Ministers meeting this weekend will look at whether "enhanced international cooperation on the regulatory response should be pursued", according to a background document. They also plan to discuss intervention in takeover battles such as the recent hedge fund fight over Dutch bank ABN AMRO.

The document says that action of some sort is needed "given that the influence of hedge funds on the efficiency and stability of the financial system has grown substantially". Hedge fund managers are also accountable to regulators even though most funds are registered offshore such as in the Cayman Islands.

The G7 is comprised of official representatives from Britain, Canada, France, Germany, Italy, Japan, and the United States. The group released their conclusion last month that the world's major developed economies show solid growth, but foreign exchange fluctuations, the rising power of hedge funds and dwindling energy supplies are a concern.

Environmental Hedge Funds Growing Rapidly

The Energy Hedge Fund Center LLC announced today that they are now tracking more than 560 energy and energy-related hedge funds in their new Directory of Energy Hedge Funds.

The vast majority of these energy focused hedge funds are based in North America but Europe is already home to 130 energy focused hedge funds and has been the focus for recent energy hedge fund formation. The directory is also now tracking more than 180 commodity hedge funds that have exposure to energy and energy-related commodities.

"Recently, we have seen a renewed interest in the creation of fund of funds in the energy and natural resources sector," reports Dr. Gary M. Vasey, Co-Principal of the Energy Hedge Fund Center, LLC. "Perhaps as interestingly, there has also been a new wave of hedge fund formation focused on energy and other related commodities since the beginning of 2007."

"We are also seeing substantial interest in the launch of larger green hedge funds and more significant growth of sustainability fund of funds this spring. We expect this trend to the accelerate as the US more toward carbon market mandates," said Peter Fusaro, Co-Principal of the Energy Hedge Fund Center LLC. "Energy and environmental hedge funds are still seen as an asset diversification play due to its non correlation."

The Energy Hedge Fund Center(EHFC) also publishes a subscription newsletter 'Energy Hedge' that tracks and announces new energy hedge funds, provides analysis of the Directory's content and includes energy hedge fund manager interviews.

InFocus Hires Hedge Fund Manager

InFocus Corporation announced that they have added hedge fund manager John D. Abouchar and Bernard T. Marren to serve as members of the Company’s Board of Directors. Abouchar and Marren were designated to serve on the Board of Directors by the companies largest shareholder Caxton Associates L.L.C.

Abouchar is an independent consultant to GRT Capital Partners, LLC, based in Boston, Massachusetts, and a portfolio manager for the GRT Technology L.P. hedge fund. Prior to joining GRT Capital Partners in 2006, Abouchar was a Senior Analyst for six years at Pacific Edge Investment Management, a $300 million value technology hedge fund based in Palo Alto, California. Mr. Marren is the Chairman, Chief Executive Officer and President of OPTi Inc., an intellectual property licensing company based in Palo Alto, California.

“Effective yesterday, we officially added Mr. Marren and Mr. Abouchar to the InFocus Board of Directors,” stated Michael Hallman, lead InFocus independent director. “We look forward to their insights and contributions as we continue the evaluation of strategic alternatives for the Company,” concluded Hallman.

InFocus is an inventor and pioneer in the projection market, InFocus Corporation's global headquarters are located in Wilsonville, Oregon, USA, with regional offices in Europe and Asia. LiteShow, LP, ASK, ScreenPlay, Play Big, Work Big, Learn Big and The Big Picture are also registered trademarks of InFocus.

ABN In Exploratory Talks With Shareholders

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.

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.

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.

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.

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.

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%).

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.

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.

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.

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.

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.

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.

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.