New York (HedgeCo.Net) – A new onshore fund has been launched by Swedish $14 billion hedge fund giant Brummer & Partners, combining equities and credits, according to a statement on their Swedish website.
The new fund, Carve, seeks opportunities to earn a high risk-adjusted return by investing in both equity and credit in a company’s capital structure. A report by the Financial Times said that Carve has already secured at least $500m in the first month since Brummer marketed the fund to domestic clients.
The fund is expected to launch in October 2012, provided a permit is obtained from the Swedish Financial Supervisory Authority (Finansinspektionen). Managers Per Josefsson, Peter Thelin and Bo Börtemark will manage the fund. Stefan Engstrand from Zenit and Christian Fredriksson from Goldman Sachs have also joined Carve. Another senior manager has been recruited, whose name has yet to be released. Carve’s assets are expected to further rise coming from investors from the UK and Switzerland before its official launch, the Swedish website said
Carve is a global equity and credit hedge fund combining long/short equity strategies with capital structure arbitrage, i.e. investment opportunities combining equities, corporate bonds and government bonds.
The rationale behind Carve is that the managers see a number of structural changes in the market that in combination create attractive investment opportunities. These include the global financial imbalances that create stress and continued volatility. The bond market in Europe is undergoing a process of change, whereby companies will need to seek financing themselves increasingly by issuing bonds as banks’ balance sheets contract. Concurrently, the investment horizons of investors are becoming shorter. Investment banks are cutting back their research resources, especially for less liquid equities and bonds. Promising investment opportunities are opening up in such an environment.
The fund will invest in equities, corporate bonds and government bonds. As investors in the fund will give a long-term mandate, the fund will be free to invest in less liquid strategies that are judged to be particularly interesting. The strategy requires in-depth research and knowledge of both the equity and bond markets, and the team has been strengthened by the addition of both credit managers and credit analysts.
“In recent years the financial markets have become increasingly short-term. This creates opportunities for high risk-adjusted returns if we have a mandate to take long-term decisions based on locked in capital from unit holders, and if we work with the greater part of a company’s capital structure,” says Per Josefsson, the fund’s CIO.
The fund will have three different classes of unit with different liquidity and lock-in, at most for periods of three years with three months’ notice of redemption when investors may only withdraw 25 per cent of the investment at a time. The fixed fee is 0.5-1 per cent, in addition to which a performance fee is payable on the return above the high water mark.
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