Moneyweb- Merrill Lynch & Co, the world’s largest broker, plans to start offering prime-broking services to South African hedge funds to tap increasing growth.
New York-based Merrill Lynch will vie with local brokerages including those of Peregrine Holdings, Investec and FirstRand’s Rand Merchant Bank. Hedge-fund assets in South Africa rose fourfold to R26bn in the two years through June 30, according to a survey of more than 70 managers by Novare Investments published on Tuesday.
“There is a lot of money that still has to flow into this market from institutional investors,” Andrew Wildish, the head of the South African prime broking unit, said in an interview in Johannesburg today. Merrill plans to differentiate itself from competitors through its analysis of risks across all of a hedge fund’s positions and portfolios, Wildish said.
There is enough capacity left in open funds to take an additional R30,5bn in funds, the Novare survey said. Hedge-fund assets account for 0,6% of the All Share Index, Novare said. As of the end of June, prime brokers provided services to managers representing 75% of the industry’s assets, the Novare survey said.
