Liberty Ermitage launches European hedge fund seeding vehicle
Channel Islands (Jersey)-based Liberty Ermitage has
launched a European hedge fund seeding vehicle called the Strategic Partners
The new Strategic Partners Fund, which is listed on The Irish Stock Exchange,
will commence with circa US$110 million and commitments for its July opening
are likely to take this figure to circa US$200 million.
The fund will have three further quarterly opening periods and Liberty Ermitage
anticipates closing the fund with US$500 million under management. The Fund
will seed and cultivate start-up and emerging hedge funds mainly within the
rapidly expanding European market.
Ian Cadby, Group Executive Director - Strategic Investments at Liberty Ermitage
is also the Portfolio Manager for the new fund. He said: "Liberty Ermitage is
uniquely positioned to manage this vehicle which draws on our considerable
expertise in seeding, sponsoring and evaluating hedge fund managers since
1984. This vehicle blends all the desires and aspirations of the investor and early
stage hedge fund manager."
Mr Cadby said the team at Liberty Ermitage has spent over a year carefully
structuring each aspect of this product to ensure that all the issues are
embraced, from both managers' and investors' perspectives.
The fund will invest in hedge funds across a range of both directional and spread
based strategies. In addition to seed investment, managers will have access to
Liberty Ermitage's distribution, business and strategic advice in return for
economic participation and representation on the respective hedge fund boards.
Mr Cadby said: "It is typical for funds of funds to insist on transparency at hedge
fund level, but how many offer transparency at the business level?"
Both Mr Cadby and Ron Mitchell, CEO of Liberty Ermitage, argue that now is the
time to step up investments into early stage managers, as the current
environment has created a whole range of attractive seeding propositions.
Mr Mitchell said: "We firmly believe our formula offers the optimal solution for
both parties. Such is our conviction that we have committed US$50 million of our
capital to the fund".
The new fund will generate returns from both the underlying hedge fund
strategies and economic participation in the fund management businesses.
Significant interest has come from institutional investors, ranging from US
pension funds and foundations to US and European investment banks.
Richard Lindsey, President of Bear, Stearns Securities Corp. said, "We are
extremely enthusiastic about entering this partnership. It enables us to form
relationships with early stage hedge fund managers in the rapidly growing
European hedge fund marketplace and it further solidifies our position as one of
the leading prime brokers globally."
Mr Cadby said many US hedge fund investors have been immediately attracted
to the Strategic Partners Fund by its Euro-centric hedge fund exposure and the
enhanced information flows.
The Strategic Partners Fund will charge a 1.5% annual management fee and an
incentive fee based on 25% of the economic participation in the underlying hedge
fund businesses. Minimum subscription has been set at $20 million although the
manager has discretion to scale the entry levels.
Background Note: Liberty Ermitage Group (LEG) has over US$2.4bn under
management with US$700 million in money funds, US$700 million in equity and
bond funds and US$1bn in hedge funds.
LEG is a research led asset management firm whose disciplined approach
encompasses rigorous analysis at the macro & strategy levels. This top down
approach is complemented by bottom up manager evaluation with emphasis on
extensive qualitative and forensic analysis. LEG tracks over 4,000 hedge funds
with an investment team of 16 including three former hedge fund managers, and
boasts one of the largest and most experienced research teams in the hedge
LEG is owned by Liberty Group, the third largest Life Assurer in South Africa,
which in turn is part of the Standard Bank Group with combined assets under
management of US$48 billion and aggregate market capitalisation of US$6.3
LEG offers five core services:
? Single manager hedge funds;
? Funds of hedge funds- both own product and white labeling for other
? Traditional funds - AAAm rated Money funds, Equities and Bonds;
? Global Wealth Management Services; and
? Specialist Fund Administration
LEG is headquartered in Jersey, Channel Islands and has operations in London,
Bermuda and Luxembourg.
Bear, Stearns Securities Corp. provides financing, securities lending, clearing
and technology solutions for approximately 2,800 clients, including hedge funds,
money managers, registered investment advisors, short sellers, arbitrageurs and
other professional investors trading at multiple trading firms. BSSC processes
over 300,000 transactions daily and clears securities in more than 70 countries
worldwide. BSSC also provides clearing, operational and administrative services
for registered broker dealers, members of the New York Stock Exchange and/or
the NASD who engage in the retail or institutional brokerage business.
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