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Denver Post - College endowments and state pension funds that once plowed billions of dollars into hedge funds and private-equity investments as a way to balance their stock holdings officials are watching the value of their alternative investments shrink.
So far, the losses are mostly on paper, but analysts say they could eventually lead to reduced payouts to retirees, higher taxes so state governments can fulfill their promises, or less cash available for colleges to give out as financial aid.
In recent years, endowments and pensions heaped cash into hedge funds — private investment funds that often use unconventional and risky trading strategies. They also bought into private-equity funds, which make direct investments into private companies or buy them out.
Reuters UK - Fund manager Aberdeen Asset Management is eyeing opportunities to snap up funds of hedge funds and funds of private equity funds at bargain-basement prices, its chief executive said on Thursday.
Martin Gilbert said that with opportunities in these areas "now pretty strong" as the global financial crisis causes upheaval in the industry, the fund manager could look at making small acquisitions.
"Funds of hedge funds (FOHFs) and funds of private equity are a lot cheaper than they were six months ago, and they are significantly cheaper than they were two years ago.
"FOHFs, for example, were selling for 15 percent of assets under management two years ago. They are now down to very, very manageable levels, very attractive levels, and a lot of them are subscale, so I think there is an opportunity to consolidate in that area," Gilbert told Reuters in an interview.
West Palm Beach (HedgeCo.net) - Hedge fund IT provider, Richard Fleischman & Associates, announced that Colin Moe has joined the firm as account manager. The appointment furthers RFA’s unprecedented growth and commitment to serve its client base of 400-plus alternative asset firms.
Increased demand for flexible technology solutions by RFA clients is being driven by turbulent market conditions and the need to stay nimble with IT infrastructure for expansion or contraction in the immediate future.
In this role, Colin will work with clients to assure optimized service levels and performance outcomes. As a focal point of contact, he will orchestrate the deep bench of resource available to RFA clients ensuring client satisfaction.
“Colin is an accomplished and respected industry professional with outstanding credentials and extensive prime brokerage expertise that our clients will immediately identify with,” said Don Previti, director of business development at RFA. “His important role as Strategic Account Manager will further reinforce RFA’s position as the vendor of choice for firms in the alternative asset space."
With more than ten years of experience, Colin joins RFA following long tenures in account management with Citigroup Prime and Bear Stearns Prime. He has a wide range of account experience, having worked in depth with hedge funds of differing trading strategies, investment styles and asset sizes, ranging from start-ups to multi-billion-dollar funds. His professional specializations encompass trading facilitation, technologies, implementation and training, and asset financing.
Established in 1990 and headquartered in New York, NY, Richard Fleischman & Associates is a trusted technology advisor to over 400+ hedge funds, private equity funds and fund of funds globally, offering both turnkey IT solutions and on-site and remote monitoring staffed 24/7/365.
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West Palm Beach (HedgeCo.net) - Sidley Austin LLP has added six new members to its Executive Committee, the Committee that exercises general authority over the affairs of the firm, and two new members to its Management Committee, the Committee which governs the firm’s day-to-day activities.
William D. Kerr of Chicago joins as global coordinator of the firm’s Investment Funds, Advisers and Derivatives practice and a partner since 1991. He represents clients in securities and derivatives-related corporate and regulatory matters, including the organization and operation of hedge funds, commodity pools, real estate funds and private equity funds, organization and operation of investment advisers, commodity pool operators and commodity trading advisors, structured products, and derivatives documentation and regulation.
Michael J. Schmidtberger of New York has been a partner since 1993 and a global coordinator of the firm’s Investment Funds, Advisers and Derivatives practice, focuses his practice on securities and futures-related funds and corporate transactions, including related regulatory matters.
Schmidtberger regularly advises and represents clients in domestic and international offerings of hedge funds, fund of funds, public and private commodity pools and structured derivative and principal-protected transactions. Mr. Schmidtberger has also counseled clients in numerous fund restructurings and work-out situations. He is also a member of the firm’s Executive Committee and a member of the Committee on Retention and Promotion of Women.
“All of these partners are extremely talented lawyers and have contributed significantly to the growth and success of the firm,” said Thomas A. Cole, Chair of the Executive Committee.
Also hired are, Edward G. Poplawski, Raymond A. Bonner, Constance Choy and Peter D. Keisler, bringing the current count to 49.
“We are delighted to welcome these lawyers to governance roles so they may continue to serve as leaders of the firm,” said Charles W. Douglas, Chair of the Management Committee.
Sidley Austin LLP is one of the world’s largest full-service law firms, with more than 1800 lawyers practicing in 16 U.S. and international cities, including Beijing, Brussels, Frankfurt, Geneva, Hong Kong, London, Shanghai, Singapore, Sydney and Tokyo.
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Bloomberg - If Sherlock Holmes were analyzing the credit crunch, he would be drawing our attention to the dog that didn’t bark, just as he did in “The Hound of the Baskervilles.”
The dog, of course, would be hedge and private-equity funds.
Anyone tracking markets in recent years will remember the prediction that the unregulated, feverish trading of hedge funds, and the massive debts and complex financial engineering of buyout firms, would cause the next crash.
The crash happened, but it was started by what appeared to be safer institutions. It was the relatively dull mortgage lenders, and the investment banks that supplied their funding through the wholesale money markets, that sparked the collapse.
West Palm Beach (HedgeCo.net) - State-owned company China National Chemical Corporation (ChemChina) and hedge fund manager the Blackstone Group announced the closing of Blackstone’s investment in ChemChina subsidiary, China National Bluestar Corporation.
Bluestar has also completed its group restructuring and has registered as a Sino-foreign joint stock limited company. Blackstone will invest up to $600 million in Bluestar for a 20% stake. Two Senior Managing Directors of Blackstone, Antony Leung and Ben Jenkins, will join the board of Bluestar.
Headquartered in Beijing, ChemChina was founded in 2004, and administrated by the State-owned Assets Supervision and Administration Commission of the State Council of China. Through fast growth in the last 4 years, ChemChina is now a large group corporation with both asset value and revenue exceeding RMB100 billion ($14.6 billion). ChemChina is ranked 35th among China’s top 500 corporations, according to National Bureau of Statistics of China.
The Blackstone Group’s alternative asset management businesses include the management of corporate private equity funds, real estate opportunity funds, funds of hedge funds, mezzanine funds, senior debt funds, proprietary hedge funds and closed-end mutual funds.
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Reuters - Hedge funds and private equity funds should be monitored closely but there are no plans to propose regulation, a top European Commission official said on Monday, sparking anger from left wing lawmakers.
It has been the heavily regulated sector of the financial services industry, including banks, that has been allowed to "run amok with little-understood securitization vehicles," EU Internal Market Commissioner Charlie McCreevy told the European Parliament.
"I don’t believe it is necessary at this stage to tar hedge funds and private equity with the same brush as we use for the regulated sector," said McCreevy, who has sole powers to propose EU-wide financial regulation.
Reuters - The U.S. Labor Department should provide pension plans with guidance on investing in hedge funds and private equity, a report issued by the Government Accountability Office (GAO) said on Wednesday.
The report found that pension plans are investing more and more in alternate investments like hedge funds, which are traditionally less transparent and riskier.
Available data of mid- to large-size plans show that between 21 and 27 percent invest in hedge funds and more than 40 percent invest in private equity, said the GAO, the investigative arm of Congress.
Because hedge funds and private equity investments are exempt from federal regulations that generally apply to other pension plan investments, the GAO recommended that the Secretary of Labor provide greater clarity on the differences between safe and unsafe investments.
The Labor Department said it would consider the feasibility of developing specific guidance. But said guidance may be difficult to develop given the lack of uniformity in describing hedge funds, private equity funds and their investments and operations.
Business Day - Private equity firm Actis says equity funds have embraced investing in Africa because many governments have instituted market reforms which are creating opportunities for brave investors willing to take a long-term view on Africa.
“There is increased private equity interest in the continent, illustrated by numerous new (private equity) funds being raised for Africa," Peter Schmid, head of Actis Africa, said yesterday.
His firm recently led a consortium to acquire Alstom South Africa, a big electrical engineering, manufacturing, distribution and contracting business, for R5,16 bn.
Analysts say the lure of emerging markets in countries such as Russia, China and India, and now Africa, has grown stronger after the bruising credit crunch in the US and Europe.
“There is increased private equity interest in the continent, illustrated by numerous new (private equity) funds being raised for Africa," Peter Schmid, head of Actis Africa, said yesterday.
His firm recently led a consortium to acquire Alstom South Africa, a big electrical engineering, manufacturing, distribution and contracting business, for R5,16 bn.
Analysts say the lure of emerging markets in countries such as Russia, China and India, and now Africa, has grown stronger after the bruising credit crunch in the US and Europe.
Reuters - Switzerland plans to ease the tax burden for hedge funds and private equity funds and soften regulations for investment funds in a first step to boost its standing among other financial centres.
The goal is to get the tax burden for hedge funds and private equity funds in line with taxes of 15 to 20 percent in competing centres like London or New York, the chairman of the Swiss Bankers Association Urs Roth told journalists on Friday.
Peter Siegenthaler from the Federal Finance Administration said up until now taxation varied widely due to different application of local, state and federal tax rules, putting Switzerland at a disadvantage with other financial centres competing for the growing hedge fund industry.
The Federal Tax Administration will ask tax collectors to clarify tax-related problems linked to performance fees and carried interest, to make the Swiss tax environment "competitive", the joint committee of Swiss financial sector associations and the government said in a statement.
West Palm Beach (HedgeCo.net) - Privately owned asset manager, Unigestion, has appointed Konstantinos Iordanidis as Managing Director and Head of Hedge Funds. Unigestion has $11 billion invested in hedge funds, private equity funds and quantitative equity strategies.
Iordanidis is a co-founder of Z.I. Investment, LLC, a global macro hedge fund in Chicago and former Head of Asset Allocation at Julius Baer Asset Management in Zurich from 2003 to 2005. He joins from Olympia Capital Management in Paris where he has been Co-Chief Investment Officer since 2005.
Based in Geneva, his role will be to lead the development of Unigestion’s fund of hedge funds business which comprises 43 investment professionals based in Geneva, London, New York, Paris, Singapore and Guernsey.
The arrival of Iordanidis will provide the opportunity for Bernard Sabrier, Chairman of Unigestion, and Patrick Fenal, CEO, to devote more time to the overall management of the Group focusing on the strategic direction of Unigestion over the next decade. Both will continue to have a key involvement in the fund of hedge fund business, including close relationships with hedge fund managers and Unigestion’s clients.
"It is a natural move for us to reinforce our management structure as we continue to build a multi-disciplinary, multi-cultural and multi-geographic hedge fund team delivering superior quality products to our clients in a consistent and disciplined way." Patrick Fenal, CEO of Unigestion said.
"We are proud to have attracted such a talented individual to strengthen our team." Chairman of Unigestion Bernard Sabrier added, "No doubt he and the team will build on our existing expertise and continue to provide our clients with a combination of products and client service at the leading edge of the fund of hedge fund industry."
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Reuters - Shanghai has decided to let foreign investors, including private equity and venture capital funds, register legally as local equities investment firms as China’s financial hub moves to lure more overseas investment.
Foreign investors with a focus on Chinese equities can set up a Shanghai-registered entity with initial capital of 100 million yuan ($14.56 million) or more with the legal status of a local investment company and receive special tax treatment, according to a city government document dated Aug. 11 and obtained by Reuters on Friday.
Qualified foreign investors would include private equity funds, venture capital funds, buyout funds and hedge funds, it said.