Kapstream, a USD4billion Australia-based fixed income and credit specialist, have managed to secure USD50million in seed capital for their new Asian credit strategy entitled: Kapstream Asian Bond Fund. Triple A Partners Australia, a hedge fund advisory firm, will market the fund globally and helped introduce an offshore investor to the Cayman fund. According to Kapstream managing director, Kumar Palghat (pictured), the fund has been launched with USD50million in a segregated mandate but should be available to external investors in August via a Cayman mutual fund company. Palghat said he expected additional inflows of USD50million by year-end. Writing on the firm’s website, Damien Hatfield, director of Triple A Partners Australia, said that the new bond fund would initially be accessed via a Cayman fund structure, but at a later date an AUD Trust Feeder would be built.
Kapstream currently has USD2billion in traditional mandates and USD2billion in an Absolute Return Strategy. The Asian Bond Fund will target returns of 9 per cent to 12 per cent and volatility of 5 per cent and look to invest in 10 Asian investment-grade countries in Asia ex-Japan. No leverage will be employed. The fund has the facility for 10 per cent passive exposure to currencies in the region. “Investors are looking to diversify their current fixed-income allocation to regions with positive economic fundamentals and Asia looks very attractive,” said Palghat. Hatfield noted that Asian bond markets are expected to quadruple in size over the next five years, having grown from 6 per cent of world bond markets in 2000 to 12 per cent today. He believes the region will continue to see capital inflow, and may well accelerate if Greece isn’t able to tackle its sovereign debt issues.
