Sunwah to buy RAB Capital's Energy and Octane funds
Sunwah International Asset Management (SIAM), the asset management arm of Sunwah International Limited, has entered into a non-binding letter of intent with RAB Capital plc for the purchase and novation of the investment management agreements of its Energy Fund and Octane Fund (the novation).
SIAM has also entered into discussions to acquire an 80% stake in PCE Investors Limited (PCE), a UK-based, FSA regulated, institutional management business with approximately USD550 million assets under management.
In addition, Sunwah has entered into a non-binding letter of intent with an Asian based alternative asset manager who has expressed its intention to commit to invest USD50 million into the Energy and Octane Funds and a further amount of approximately USD200 million to back stop redemptions and secure the capital of the funds.
Completion of the novation, funding of the commitment and acquisition of the interest in PCE will officially launch Sunwah’s asset management business. The completion of these transactions will mark a major shift in the company’s business model towards a more diversified and stable income base.
“These transactions provide confirmation of Sunwah’s business plan to become a leading global funds platform,” says Doug Betts, President and CEO of Sunwah. “It is very encouraging to have this level of investor support. Securing additional investments from sophisticated investors, when combined with the robust risk management systems of PCE and its experienced operational management team, puts us well ahead of our original business plan. The combined effect of the transactions will result in SIAM controlling a fully regulated global operating asset management platform with a target to achieve USD1 billion of assets under management by year end.”
As described in the company’s news release dated January 31, 2011, SIAM is becoming a global fund business bringing an Asian perspective to emerging and growth markets. The SIAM business will operate on the “family of funds” model. SIAM will recruit “best in class” fund managers, grow assets and identify investment opportunities. “Both the Energy Fund and the Octane Fund meet this best in class standard,” says Betts.
RAB Capital is a specialised asset manager publicly traded on London’s Alternative Investment Market. Its Energy Fund was awarded the Eurohedge Award as best global long short equity fund of 2010 and its managers have received numerous accolades over the past decade. The compound annual return of the Energy Fund has been 16% since the fund’s inception in 2004 and it has outperformed the FTSE 350 Oil & Gas Index by 129% and the AIM Oil & Gas Index by 164% since inception.
PCE is an alternative asset management business specialising in fundamental and systematic portfolio management processes within a rigorous and embedded risk management environment. Fund managers with PCE are supported by an institutional infrastructure with an integrated risk management overlay. PCE delivers an alignment of interests between investor and fund manager through transparent and robust systems of risk management, reporting, legal and compliance and a client-focused business infrastructure. PCE is authorised and regulated by the Financial Services Authority (FSA) of the United Kingdom; it is registered with the Securities and Exchange Commission (SEC) of the United States and is able to market its funds to professional investors throughout Europe. PCE has a presence in London, Singapore and New York, providing 24-hour risk management and monitoring coverage.
“In this day and age, governance, risk management and vigorous systems and controls are absolutely essential to safeguard the interests of investors,” says Bill Majcher, CEO of SIAM. “I have dedicated considerable years of my professional life to enhance and protect the integrity of capital markets. I am very confident that PCE not only meets these expectations but in fact exceeds them.”
“We are very pleased by the opportunity to launch the business with two of the leading funds in the energy sector,” says Majcher. “Our initial discussions with many existing investors confirm they are supportive of the Novation and are pleased to see Sunwah involved.”
The current portfolio manager of both the Energy and Octane Funds will continue to manage the Funds subsequent to the Novation. Consideration for the Novation consists of a combination of cash and a share in future management and performance fees in favour of RAB Capital.
Funding of the intended commitment is conditional on the completion of the novation. The commitment when advanced will serve as new capital for the Funds and to effectively backstop any potential redemptions by current investors. Closing of the novation, the acquisition of the interest in PCE and funding of the Commitment is conditional on a number of factors, including executing definitive legally binding agreements, the approval from boards of directors of Sunwah, PCE and RAB Capital, and SIAM having closed its acquisition of PCE Investors Limited. The Novation is expected to close the later of regulatory approval or August 31, 2011.
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