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Hedge funds are seeing less activity from the competing proprietary trading desks of investment banks, making it easier for them to capitalise on investment opportunities, according to Daniel Och, founder of Och-Ziff Capital Management. "The proprietary trading desks at banks are substantially less active," he told the Financial Times.

And as if on cue, the New York-based hedge fund manager has increased its stake in Australian Stock Exchange-listed private equity fund Babcock & Brown Capital from 4.76 per cent to just over 12 per cent, becoming its largest shareholder.

The move comes just after Babcock & Brown Capital received an unsolicited EUR95m bid from a consortium including Rob Topfer, a former executive of the fund's bankrupt sponsor, Babcock & Brown, who helped orchestrate the purchase of Irish telecoms provider Eircom in 2006. The company is also reported to have received a EUR100m approach from Singapore Technologies Telemedia.

Babcock & Brown Capital has rejected the offer from Topfer's TaemasBridge consortium, but Och-Ziff apparently believes that the Australian company, which also owns Israeli Golden Pages, is set to be the target of a bidding war. The fund has seen its value fall by 55 per cent over the past year, but Och-Ziff's newly-acquired shares are already reported to be in the money.

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