James Williams, news editor, Hedgeweek

FSA amends KIIDs rules, GLG Partners nears soft-close target of USD1billion for European Ucits, whilst Bernheim Dreyfus gets USD40million cash injection for Diva Synergy Ucits fund

This week the UK Financial Services Authority (FSA) announced that it had modified its rules on the provision of the key investor information document (KIID), required to be produced by managers under UCITS IV. It should, says the FSA, make life easier for some managers. As part of the implication of UCITS IV in the UK, a KIID must be provided to every investor in a UCITS fund in advance of any investment being made. The reality is, however, that firms have faced practical difficulties satisfying this pre-investment provision of the KIID in cases where the client is looking to invest in the fund using a means of distance communication like the telephone or post. The rules simply fail to deal with how managers are expected to provide the KIID in good time under such circumstances.

To get around this the FSA has modified its Conduct of Business Sourcebook (COBS) to allow firms to provide the KIID immediately after the conclusion of the transaction, as opposed to before it. The FSA says this modification is valid until 30 June 2014 unless subsequently withdrawn. They do however make the point that the European Commission’s forthcoming Packaged Retail Investment Products (PRIPS) initiative may affect this modification. Firms wishing to take advantage of the KIID modification are instructed to contact the FSA’s Central Waivers Team.  
 
Paris-based Bernheim, Dreyfus & Co., the M&A specialist, has received a USD40million cash injection from the recently launched Emergence seeding platform reported FINalternatives this week. It brings total AUM in the Diva Synergy UCITS event-driven fund, run by Lionel Melka, Amit Shabi and Sébastien Dettmar, to approximately USD50million. The fund was launched in mid-2011 and looks to generate absolute returns by building positions in equity M&A deals in Europe and North America using two distinct sub-strategies: merger arbitrage (announced transactions) and pre-event (expected transactions). The cash injection would help the fund reach critical size in time to capitalize on an expected uptick in M&A activity, which last year was fairly muted.
 
In a statement, the firm said that corporates and private equity houses were sitting on huge amounts of liquidity, waiting to be deployed, adding: “The progressive resolution of macroeconomic uncertainties, especially in Europe, should encourage CEOs to look for acquisition opportunities.” The Emergence seeding platform was established in early 2012 with the backing of seven major French institutional investors representing more than USD1.5trillion in assets.    
 
BlackRock’s former head of global emerging markets, Daniel Tubbs, has joined Mirabaud Asset Management reported FTAdviser. Tubbs will manage a long-only Ucits fund for the Swiss private bank’s asset management arm. He will be based in London and lead a three member team. The Lux-domiciled fund will focus on emerging market equities. Luiz Soares has replaced Tubbs as co-manager of the UK-based GBP180million BlackRock Emerging Markets fund and Luxemburg-based EUR1.75billion BGF Emerging Markets fund.  
 
In what has been a phenomenally successful 12 months for GLG Partners’ retail European equity fund, there are already plans to soft close the Ucits-compliant vehicle having reached USD760million in AUM. This will happen when it reaches USD1billion in size. It is expected to hard close at USD1.25billion. At a time when many funds are struggling to raise assets, it seems the Pierre Lagrange’s Dublin-domiciled GLG European Equity Alternative fund, which launched last July, is having no such trouble. As the FT’s Steve Johnson wrote this week, Simon Savage, co-manager of the fund, said it was a “staggering” amount to attract in less than a year, particularly given an in-house expectation that it will underperform its Cayman Islands sister by 50bp a year.
 

Savage was quoted by FTAdviser as saying: “The provision of a market neutral, equity long/short discipline with daily liquidity clearly holds broad appeal for investors,” said Savage. “However, in order to protect the best interests of our investors in all vehicles, and to ensure that the fund retains the ability to meet its capital growth/capital protection objectives, it is essential to constrain assets at an appropriate level for prudent risk management.”      

 

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