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West Palm Beach (HedgeCo.net) – Hedge fund manager Integrated Asset Management plc has sold the majority of one of its London fund of hedge funds business to a subsidiary of Sal. Oppenheim jr & Cie S.C.A, for approximately €3.5 million ($4.6 million) in cash and the cancellation of Sal. Oppenheim’s entire share interest.
The transaction does not impact the hedge fund manager’s brokerage operations in Milan which will continue to operate as usual, Integrated said.
The fund of hedge funds business as a whole reported net assets of £24.28 million ($32.3 million). In the 6 months ended 30 June 2008 the fund of hedge funds business reported unaudited net assets of £24.42 million ($32.4 million) and assets under management of $2,402 million ($3.2 million).
“In response to the unprecedentedly challenging market conditions of the past nine months, we have structured this deal with Sal. Oppenheim to benefit both our funds’ investors and the Company’s shareholders." Emanuel Arbib, CEO of Integrated, said. "Once the transaction is completed, Integrated, with a strong and liquid balance sheet, will be well positioned to consider opportunities that are available in today’s marketplace.”
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CNN Money – Hedge funds may be struggling and closing up shop in the current market environment, but Goldman Sachs Group Inc. (GS) was able to make more money tending to the funds’ needs this year than last.
The company, which on Tuesday reported its first quarterly loss since it went public a decade ago, was able to post a 19% gain in revenue in its securities services operations for the three months that ended Nov. 28, compared to the same period last year. The business also turned in record net revenues for all of fiscal 2008 at a time when Goldman’s normally high-octane trading and principal investing line was down by 71% for the year.
Goldman’s security services business is dominated by its prime brokerage operations, whose clientele comes primarily from hedge funds. Competitor Morgan Stanley (MS), which runs a similar prime brokerage business that turned in record net revenues last quarter, reports its earnings on Wednesday.
Though hedge funds have been hard-hit by customer redemptions and market losses, Goldman was able to generate more revenue this year because its securities services business mix became more profitable, Chief Financial Officer David Viniar told analysts during a conference call.
Bloomberg – BNP Paribas SA, France’s biggest bank, won prime brokerage business in Asia with hedge fund CQS (U.K.) LLP as it seeks to lure clients in the region from rivals.
The new contract with CQS, a London-based hedge fund manager that has an office in Hong Kong and oversees about $7.5 billion, adds to BNP Paribas’s existing relationships with major hedge funds in the region, according to Talbot Stark, global head of BNP Paribas hedge fund relationships. He declined to name other existing clients.
“We have prime brokerage relationships with three or four of the market leaders in Asia that are outperforming their peers and look to be longer-term survivors in the Asian hedge fund market,” Stark, 43, said in a telephone interview yesterday. “We’re in discussions with several other key players that are making decisions to change their prime brokerage providers and are seeking alternative providers that are established and committed to the region.”
West Palm Beach (HedgeCo.net) – BNP Paribas has launched a global, transversal, multi-asset, hedge fund client service team. The team will be a single point of entry for Hedge Funds for all inquiry, according to BNP, leveraging the bank’s capabilities and focusing on operational efficiencies.
The team is headed globally by John Polivko, based in New York and reporting locally to Jean-Patrick Kaiser, Deputy Chief Operating Officer, and globally to Bernard Gavgani, Equity and Commodity derivatives COO and Francois Freyeisen, Fixed Income COO.
Polivko recently joined the firm from Merrill Lynch where he was in charge of the client service organization for Prime Brokerage and more recently worked in financing sales. Prior to Merrill Lynch, Polivko also spent 7 years as a Managing Director at Bears Stearns in Prime Brokerage.
In addition, the appointments of regional managers reporting directly to John Polivko are Victoria Baker, Neil Spice and Jacqueline Man as regional head of hedge fund client service based in Hong Kong.
Talbot Stark, global head of hedge fund relationship management said, "Hedge Funds are a very important client base for BNP Paribas, following the acquisition of Bank of America’s Prime Brokerage business as well as the growth of the hedge fund relationship managements team, the creation of this function is another step in better serving those clients."
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guardian.co.uk – Morgan Stanley survived the recent panic in financial markets, but its prime brokerage business may never fully recover.
More than a third of Morgan’s prime brokerage assets went out the door during the past month — some rivals said attrition could be as large as one-half — as investors unnerved by the credit crunch lost confidence in the bank.
Across Wall Street, hundreds of investment funds that relied on broker-dealers established accounts with commercial banks boasting stronger credit. The moves have shaken up a business long dominated by Morgan Stanley, Goldman Sachs Group Inc and Bear Stearns.
"It’s a $2 trillion business and in normal market conditions, people kill themselves to move 1 percent of market share. In recent weeks, probably 35 to 40 percent of global market share has been redistributed," said Alex Ehrlich, global head of prime services at UBS. "Never has there been a more disruptive period."
Hindu Business Line – Worried that global financial services provider Morgan Stanley may land into financial troubles like Lehman Brothers, several hedge funds fled the bank resulting in a loss of billions of dollars in its prime brokerage business last week, a media report says.
“Many of the world’s biggest hedge funds moved their assets to commercial banks regarded as safer last week, as they and their investors worried that Morgan Stanley could follow Lehman into trouble,” the Financial Times said.
Quoting people familiar with the business Financial Times said, “Losses will deal a big blow to Morgan Stanley as its prime brokerage is one of its most profitable and successful businesses.”
The withdrawal of client assets is likely to make Morgan Stanley’s business less profitable by restricting its ability to fund loans to hedge funds from balances left by other hedge funds, FT added.
Hedge funds are pooled investment funds, usually a private partnership that seeks to maximise absolute returns using a broad range of strategies, including unconventional and illiquid investments.
CNNMoney.com – Hedge funds were leaving the prime brokerage business of Lehman Bros. (LEH) long before Lehman filed for Chapter 11 bankruptcy Sunday, and now, business there has all but stopped, according to sources.
But in certain areas, like the statistical arbitrage and repurchase, or repo markets, Lehman was and still is a top player. What happens to the prime brokerage is a complicated question, because most of that business is located in the U.K. While Lehman included its prime brokerage as part of its bankruptcy, it is not thought to be subject to the laws of Chapter 11 since the business is in the U.K.
Lehman’s prime brokerage, which like others lends money and securities to hedge funds as well as provides administrative services from back-office help to processing trades, was a key revenue-earner for the bank as recently as earlier this year. In its first-quarter earnings report in March, Lehman had reported a 38% year-over-year revenue increase in its securities service unit, which includes prime brokerage. At that time, it said it had $194 billion in hedge fund balances.
But as the investment bank started stumbling more and more the past few months – along with the rest of the financial services industry – Lehman started losing all or part of the business of hedge fund customers afraid of the counterparty risk attached with dealing with Lehman.
West Palm Beach (HedgeCo.net) – Hedge fund broker MF Global Ltd. has appointed Michael Roseman as its new chief risk officer.
“Michael has very broad experience managing risk around the asset classes that this company brokers,” said Kevin R. Davis, chief executive officer, MF Global. “I’m delighted that he has decided to join MF Global and believe he will make a strong addition to our executive management team.”
Mr. Roseman is responsible for the overall management of MF Global’s risk department worldwide including market, credit and operational risk. He will also oversee the company’s compliance function and will report directly to the CEO.
Prior to joining MF Global, Mr. Roseman served as chief risk officer for the Americas at Newedge Group. He joined Newedge, then Fimat, USA, in 2004 prior to its merger with Calyon where he oversaw all aspects of risk related to their Americas brokerage business.
MF Global Ltd. is diversified across products, trading markets, customers and regions. Its worldwide client base of more than 138,000 active accounts ranges from financial institutions, industrial groups, hedge funds and other asset managers to professional traders and private/retail clients.
MF Global operates in 12 countries on more than 70 exchanges, providing access to the largest and fastest growing financial markets in the world. It is the leader by volume on many of these markets and on a single day averages eight million lots, more than most of the world’s largest derivatives exchanges.
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