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New York (HedgeCo.Net) - At a time when many hedge funds are experiencing their worst year to date, private equity firm The Carlyle Group is launching a new fund with around $14 billion in capital.
According to a report by Reuters, the Washington D.C. - based company launched the U.S. buyout fund in the spring of 2007, and has a target goal of $15 billion.
The current economic conditions make it extremely difficult to raise capital, as fear and unfavorable market conditions prompt investors to rush for withdraws from many large hedge funds. According to the Chicago-based Hedge Fund Research, hedge funds are down about 15.5 percent on the year.
The Carlyle Group is one of the country’s largest private equity firms, with almost $90 billion under management. They recently decided to shut down its Asia leveraged finance group “in light of the current global turmoil and the serious dislocation of the credit capital markets.”
The new fund will be added to Carlyle’s already vast portfolio of investment vehicles. According to the company website, Carlyle manages 55 different funds specializing in buyout, growth capital, real estate and leveraged finance.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
Reuters - Traditional long-only mutual funds are set to dominate shareholder registers again as the hedge fund industry shrinks and retail investors continue to stay away, according to Morgan Stanley.
Meanwhile, with institutions, including hedge funds, deleveraging aggressively, emerging markets equity issuance is set to fall to 10 percent of total volume in Europe, Middle East and Africa in 2009 from one quarter this year, the bank told the Reuters Global Finance Summit.
"Traditional classic long-only funds, which used to be the main part of shareholder registrar in the 1990s, will become more important," said Emmanuel Gueroult, head of EMEA equity capital markets.
"The hedge fund industry is deleveraging…Access to credit is difficult."
Seeking Alpha - It’s a tough world out there - I saw in the Wall Street Journal the average hedge fund lost 18% in October. Considering what their mandate is i.e. hedge - that is amazing. September was awful as well. We see stories of hedge funds that are performing well (in this market losing 10% in a year is "great") and still facing redemptions because their investors need the cash…. as Ross Perot famously said… there is a "giant sucking sound" in our capital markets.
In a world hard up for cash, even hedge-fund winners can wind up losers. Such is the fate of major credit fund Blue Mountain Capital Management, whose investors have begun yanking investments despite the fund’s performance this year, a modest 2.4% loss, compared with an average 20% loss across all funds. Blue Mountain is a major player in the credit markets, with assets of $5.5 billion invested in bank loans, bonds and credit-default swaps. Its primary fund, the $3.1 billion Credit Alternatives Fund, had lost 2.4% this year through Friday.
Performance was largely beside the point for many Blue Mountain investors, who need access to cash. Theperverse effect is that some investors have begun raiding their better-performing investments, giving the laggards a chance to recover.
BusinessWeek - Some participants in South Korea’s nascent alternative-investment market have grown pessimistic over the ability of incoming legislation to support the development of an onshore hedge funds industry.
The Capital Markets Consolidation Act will become effective in February. It is a sweeping attempt to give Korea a securities law akin to those in the United Kingdom or Australia, in which financial services are regulated by function rather than by business license, and in which most types of businesses will be thrown open to all kinds of financial institutions. It will allow the development of a universal bank and plenty of cross-selling.
As part of this, the Financial Supervisory Service has been keen to encourage the development of an onshore hedge funds industry. There are a growing number of Korea-focused hedge funds, but nearly all of them operate offshore, in Singapore, Hong Kong or the United States. The government wants to position Seoul as a financial hub for northeast Asia, and has seen how hedge funds have become a vital and welcome part of the milieu in places like Singapore.
BusinessWeek - Some participants in South Korea’s nascent alternative-investment market have grown pessimistic over the ability of incoming legislation to support the development of an onshore hedge funds industry.
The Capital Markets Consolidation Act will become effective in February. It is a sweeping attempt to give Korea a securities law akin to those in the United Kingdom or Australia, in which financial services are regulated by function rather than by business license, and in which most types of businesses will be thrown open to all kinds of financial institutions. It will allow the development of a universal bank and plenty of cross-selling.
As part of this, the Financial Supervisory Service has been keen to encourage the development of an onshore hedge funds industry. There are a growing number of Korea-focused hedge funds, but nearly all of them operate offshore, in Singapore, Hong Kong or the United States. The government wants to position Seoul as a financial hub for northeast Asia, and has seen how hedge funds have become a vital and welcome part of the milieu in places like Singapore.
The Consolidation Act makes no mention of hedge funds, however, and industry players have lobbied the Ministry of Strategy and Planning (what they call the Ministry of Economy and Finance these days) to address this. The government has responded by floating an amendment to the Consolidation Act that is expected to go before the National Assembly, probably in October. This amendment specifically addresses the ability of onshore fund managers to employ leverage.
CNBC - Japanese government bond futures tumbled nearly a full point on Thursday, with traders citing selling by foreign funds in a move that was exaggerated by thin conditions.
September futures plunged as much as 1.14 points to 137.11 as market players suspect that hedge funds sold a large amount of futures abruptly, with other market players spooked by the move and dumping positions as well.
Traders and analysts cited a variety of reasons — including selling tied to the lead contract’s roll-over next week and flows in the interest rate swaps market — but said there was not a single trigger. "A sudden selling of futures without any big cash bond market action showed the move was highly related to hedge funds who trade purely on technical reasons," said Satoshi Yamada, a senior strategist at Nikko Citigroup.
Other market players said the sharp drop showed just how fragile financial markets are right now as damaged banks have pulled back. "Why today? Why now? Why JGBs? Who knows," said Joseph Kraft, head of Japan capital markets at Dresdner Kleinwort. "Banks are scaling back and volumes are very thin. When you see sizable selling, everyone gets out of the way." The lead futures contract fell 0.85 point to 137.50, pulling further away from a four-month high of 138.80 hit last week.
Among other reasons noted for the selling, traders said that some bond dealers may have sold futures to hedge their books before the pricing of five-year bonds issued by two utilities. Others said that commodity trading advisers, or CTAs, may have finally sold futures because of their relative steepness compared with the cash market — a trend that had stirred worries in the market that it could lead to a sell-off.
Hedge Week.com - DLA Piper has appointed Australian corporate and financial services lawyer Luke Gannon as a partner in its corporate group and head of the firm’s funds practice throughout Asia. Gannon, who will be based in DLA Piper’s Hong Kong office, will work closely with partners from the firm’s financial services and regulatory groups and will act for a range of clients on mergers and acquisitions and equity capital markets matters.
Gannon has almost 20 years experience in a range of funds, regulatory and capital-raising matters in Asia, acting for clients including real estate investment trusts, hedge funds, funds of funds, private equity, infrastructure funds, wealth managers, underwriters and corporate issuers.
He was previously a partner and head of funds for eight years at Australian law firm Freehills in Melbourne, where his clients included a international investment banks, fund managers and sponsors. In 2006, he joined a major client as head of corporate and M&A, gaining extensive commercial and acquisitions experience in Asia’s financial services sector. Read Complete Article
West Palm Beach (HedgeCo.net) - In an effort to head off a forced asset sale, Windmill Management’s SageCrest Finance and SageCrest II filed for Chapter 11 bankruptcy after its assets fell sharply.
The hedge fund filed at U.S. Bankruptcy Court in Bridgeport, Conn. In a letter to investors, The fund said that the bankruptcy process would give SageCrest the time necessary to conduct an orderly liquidation of their assets to maximise the return to investors.
The fund described its investment strategy as making short-term loans to small- and mid-sized firms that cannot secure them from banks and specialty lenders. "Our position in a market where lending opportunities continue to outpace sources of capital provides an ideal point of departure for growth." The SageCrest website says, "Our investments target asset-rich and undervalued situations overlooked by, and with limited access to, the mainstream capital markets."
In its bankruptcy filing, SageCrest claimed fewer than 49 creditors and debts of between $1 million and $10 million. The hedge fund, which once boasted assets of as much as $650 million, said it now had between $50 million and $100 million.
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Reuters- Singapore’s Wittenham Investment Management launched a fund of hedge funds to invest in frontier capital markets such as Africa, Middle East and countries in the former Soviet Union.
The MENA Plus fund would start with a minimum $7 million seed capital and has a capacity to take as much as $300 million of funds from investors, said Peter Douglas, an adviser to the fund and founder of hedge fund consultancy GFIA.
"In the emerging Europe, Middle East, and African time zone, we’ve found plenty of experienced managers creating very attractive risk-return profiles," he said in a statement.
Gulf Daily News - A fund designed to tap into the potential for development of molecular and atomic-sized particle technology was launched at the 4th Annual World Islamic Funds and Capital Markets Conference yesterday.
Arbah Global, a Bahrain-based investment arm of Arbah Capital, announced the launch of the Arbah Nanotechnology Fund, which aims to raise around $100 million and run for five years.
The fund’s senior vice-president James Berlino said that nanotechnology could see the kind of growth in technology not seen since the arrival of the Internet in the 1990s and could herald a new industrial revolution.
Nanotechnology is already in use in extremely fine filters used to remove sulphur from oil and has tremendous applications across a wide range of industries, he said.
Mr Berlino said with the world currently suffering from capacity shortages and limitations in everything from food to energy to network and storage compute, the Arbah team intends to invest in companies that can breakthrough these barriers with nanotechnology, and deliver superior products at attractive prices to markets and industries suffering from shortages and capacity limitations
"The opportunity to unleash and capture global demand in so many different industries is remarkable."