Each business day HedgeCo.Net keeps you informed with the top hedge fund industry news, opinion and insight from around the globe. From the latest hedge fund launches, to the impact of regulation, competition, and investor activism - we track the topics and people that make a difference to you.
New York (HedgeCo.net) – Hedge fund giant Man Group said its assets fell by $6 billion as shares dropped nearly 22% yesterday after investors pulled $2.6 billion from its funds. Man said it expects headline pre-tax profits to have fallen from $227 million to $185 million in the six months which end this Friday.
“The extreme volatility of markets in recent months has created challenging performance conditions across asset classes.” Peter Clarke, Chief Executive of Man, said. “Hedge fund styles saw mixed performance across the period as concerns around global growth prospects and sovereign debt levels, especially in the Euro zone, precipitated violent swings in equity, currency and bond markets.”
“In terms of financial performance, although assets under management reduced in the second quarter, primarily as a result of market movements in long only and the impact of foreign exchange translation from the weakening Euro, management fees for the half have been broadly stable on a like-for-like basis.” Clarke said.
Man lost $1.5 billion through negative hedge fund performance and $1.9 billion when the euro dropped against the dollar.
Evening Standard – London’s rich hedge fund managers and private equity executives will quit the UK in droves ahead of the 50% top tax rate next spring.
That is the news from City tax advisers who say they have never been so busy consulting with professionals on how to leave the UK and avoid their tax bill from Revenue and Customs.
Chancellor Alistair Darling has announced that from next April people paid more than £150,000 a year will pay tax at 50%. But the loss of allowances in reality takes that top tax rate to more than 60% for some.
Times Online – A group of banks that financed the £450 million leveraged buy-out (LBO) of car wash group IMO will take control of the struggling business leaving a rival group of hedge fund investors with nothing.
In a High Court decision that lawyers say will damage hedge funds’ interests in dozens of ailing private equity deals, a judge awarded 100 per cent of IMO’s equity to the banks, led by HBOS.
The hedge funds, which also lent money to back the 2006 buy-out, argued that they were entitled to some equity in the business, which is being restructured after defaulting on its debts in March.
Bloomberg – The European Union’s plan to regulate hedge funds will cost the bloc’s pension industry about 25 billion euros ($36 billion) a year, the Alternative Investment Management Association said.
The proposed law would drive pension funds toward more traditional assets such as equities and bonds or cut the returns on their investments in hedge funds and private equity, London- based AIMA, the largest trade group representing the industry, said in a statement today.
“This is an estimated figure but it shows the potentially enormous impact that the directive could have on Europe’s pension funds and in the longer term, Europe’s pensioners,” AIMA Chief Executive Officer Andrew Baker said in the statement.
Private Equity Hub – A group of hedge funds that provided bankruptcy funding to Delphi Corp on Monday won a high-stakes auction to take control of the auto parts supplier, scuttling a rival deal brokered by the Obama administration.
Delphi’s board of directors and GM both offered their support for the proposed deal that would hand the company’s assets over to its debtor-in-possession lenders in exchange for their forgiveness of nearly $3.5 billion in loans.
The result, announced by Delphi late Monday, came after a two-day auction in New York.
The Independent – Grimly aware that a European Commission crackdown on regulation of hedge funds and private equity spells disaster for the EU’s predominantly London-based industry, Treasury ministers have been desperately lobbying their counterparts in Brussels for months, but their pleas have fallen on deaf ears.
Now, however, the Americans have woken up to the fact that many of their hedge funds would find it impossible to do business in the EU under proposals for regulatory reform. In recent weeks, US Treasury officials have thus been touring the EU, letting their displeasure be known.
It appears that the Americans’ involvement is already paying dividends. Sweden, which holds the EU presidency, was quietly letting it be known yesterday that it will ensure some sort of compromise is brokered. The Alternative Investment Management Association, which represents the sector’s interests, now thinks disaster may be averted.
The Australian – The move wades the US into a fierce battle between the UK and other parts of Europe over how tough regulation should be. Some nations, led by Germany and France, are calling for wholesale regulation of financial services in the wake of last fall’s crisis, but the UK says that overly stringent rules would damage its large financial sector and close off US and other funds to European investors.
The US and UK are lining up to change the European Union’s proposed Alternative Investment Funds Directive, a sweeping bid to overhaul regulation of hedge funds, private equity and other alternative investment funds.
Javno – Calpers lost nearly $60 billion in the financial markets last year, which means it has a serious long-term shortfall. Joseph A. Dear, the fund’s new invesment head, thinks the cure is in hedge funds and beaten-down private equity.
istockAnalyst.com – The Securities and Exchange Commission unanimously endorsed the proposal amid widening investigations of so-called pay-to-play donations by private equity and hedge fund executives who jockey for lucrative fees to manage some of the more than $2.2 trillion in assets held by public pension funds.
"The selection of investment advisers to manage public plans should be based on merit and the best interests of the plans and their beneficiaries, not the payment of kickbacks or political favors," SEC Chair Mary Schapiro says.
The Guardian – Value of assets held by the world’s sovereign wealth funds fell to $3 trillion this year from $3.6 trillion at end-2007 as the credit crisis nearly halved their equity portfolio, according to Deutsche Bank.
The German bank’s report on state-owned investment funds also highlighted their positive long-term prospects, with their total assets under management likely to more than double to $7 trillion in the next 10 years.
Sovereign wealth funds (SWFs), which have replaced hedge funds and private equity as major movers of corporate mergers and acquisitions, have taken a dent in their wealth after pouring $80 billion into major banks just before the credit crisis escalated into major market turmoil.
New York Times Blogs – Of all the gloomy economic indicators since the Wall Street collapse, perhaps the most startling one seen by New Jersey residents is this: Gov. Jon S. Corzine with his hand out.
Mr. Corzine, whose investments include significant holdings in private equity and hedge funds, famously spent $60 million of his own money on a record-shattering Senate race in 2000, then $43 million more laying siege to Trenton four years ago.
CNBC – The Obama administration has sent legislation to Congress that would bring hedge funds and other private pools of capital under government supervision.
The proposal calls for the Securities and Exchange Commission to oversee hedge, private equity and venture capital funds. By registering with the SEC, their books would be open to federal inspection and they would be subject to disclosure requirements to investors and creditors.
New York (HedgeCo.net) – Hedge fund giant Man Group said its assets fell by $6 billion as shares dropped nearly 22% yesterday after investors pulled $2.6 billion from its funds. Man said it expects headline pre-tax profits to have fallen from $227 million to $185 million in the six months which end this Friday.
