Hedgeweek Comment: Short selling of a different kind?
Last week, new rules from the UK's Financial Services Authority came into force under which hedge funds and other investors must reveal their positions when shorting firms that are in the process of raising capital through rights issues. This rule was imposed by the FSA at short notice after hedge funds and other speculative investors were accused of being responsible for the fall in share prices of several banks that had launched rights issues.
But although hedge funds were forced to show their hand, there seemed to be limited impact on the share price of companies such as HBOS and Bradford & Bingley that were raising capital. In fact, their shares plunged further causing further worry for shareholders and underwriters.
Now it transpires that the GBP4.5bn capital increase launched by Barclays will be backed by several of the largest hedge fund managers in London and elsewhere. GLG Partners, Lansdowne Partners, CQS and Och-Ziff have all agreed to take up a sizable portion of Barclays shares as part of its GBP 1.7bn placing with institutional shareholders, according to the prospectus issued by the bank.
According to the Financial Times, some bankers believe that the hedge funds' investment may have been undertaken as a way of covering short positions in Barclays. However, since the bank's placing is not covered by the FSA rules on rights issues, the extent of short selling in Barclays is not known. What will the regulator do next?
- Special Reports
- By Location
- Asian Hedge Funds
- BVI Hedge Fund Services
- Bermuda Hedge Fund Services
- Canada Hedge Fund Services
- Cayman Hedge Fund Services
- Channel Islands Stock Exchange
- Future of offshore funds
- Gibraltar Hedge Fund Services
- Guernsey Hedge Fund Services
- Hedge Funds in Germany
- Hong Kong Hedge Fund Services
- Ireland Hedge Fund Services
- Isle of Man Hedge Fund Services
- Jersey Hedge Fund Services
- Jersey Private Equity Services
- Latin American Hedge Funds
- London Hedge Fund Services
- Luxembourg Hedge Fund Services
- Malta Hedge Fund Services
- Middle East Hedge Fund Services
- Singapore Hedge Fund Services
- South African Hedge Fund Services
- Spanish Hedge Funds 2008
- Switzerland Hedge Funds
- US East Coast Hedge Fund Services
- US Hedge Fund Services
- By Subject
- Conference reports
Latest Special Report
- By Location
- How to set up a hedge fund