Hans Schlaikier, Hedgeweek

Chinese media investor plans USD500 million fund… Expedition shuts Asian volatility fund…

Bruno Wu aims to raise a USD500 million private-equity fund for media investments, focusing on companies targeting expansion in Asia, especially China.

Wu, who is married to Yang Lan, a television personality, who some have compared to Oprah Winfrey, is no stranger to media investments. The 46-year-old Chinese investor owns a string of media assets across the globe, and said the new fund will tap both Chinese and international investors.

The fund will invest in small to medium-size Internet, digital-media and e-commerce companies that "need China for the next wave of expansion," Mr. Wu said in an interview. He declined to identify potential investors or investment targets.

China is home to almost 600 million Internet users and its Internet, media and entertainment sectors are expanding rapidly. China surpassed Japan last year to become the world's second-largest movie market, according to the Motion Picture Association of America. In the first half of this year, box-office sales in China totaled USD1.79 billion, the State Administration of Film, Radio and Television said.

Last year, Mr. Wu and his wife started an USD800 million China-based fund with Harvest Alternative Investment to fund big studio projects that appeal to China and a wider Asian market. The fund, Harvest Seven Stars Media Private Equity, is fully invested, Mr. Wu said a reported by Reuters.

China's media industry is heating up. More than 300 deals totaling almost USD10.3 billion have been announced since 2009, data from Dealogic showed.

Private-equity and venture-capital firms accounted for about 10 per cent of the total, but regulations make many areas difficult for foreign investors to access, including the media and Internet sectors.

Expedition Advisors Ltd., backed by New York-based Protege Partners LP, is returning investor capital in its Asia volatility hedge fund after losses.

Expedition’s hedge fund, which sought to profit from stock swings in Asia outside of Japan, lost 14 per cent since its May 2012 inception, according to its March newsletter, the last one sent out to investors and non-investors in the fund and obtained by Bloomberg News.

“A prolonged period of suppressed volatility combined with a low ’vol of vol’ environment created a very difficult backdrop for our core strategy,” Craig James,  Hong Kong-based chief investment officer of Expedition, said in an e-mailed statement. “Given the current climate, it was decided that money would be returned to our strategic investor.”

The company is closing the fund as central bank easings globally increased market liquidity and subdued stock swings. The Chicago Board Options Exchange Volatility Index VIX averaged about 16 since May 1, 2012, one-fifth of the 80.9 reached on Nov. 20, 2008, when economic slowdown at the height of the global financial crisis threatened corporate profits. The index, known as VIX, measures the cost of using options as insurance against declines in the Standard & Poor’s 500 Index.

Two top executives of Millennium Management LLC are preparing to start a USD1.4 billion hedge fund in Asia, people familiar with the matter told Reuters, in what would be the region's largest such fund launch.

The Millennium spin-out could add a spark to Asia's hedge fund industry, which has suffered from poor returns and lack of capital flows in the past few years amid volatile and sinking markets across the region.

The hedge fund will be based in Hong Kong and be named Symmetry Investment Management, the people said, and will be led by Millennium portfolio manager Feng Guo and the firm's Asian regional manager, Michael Robinson. The firm plans to open for business in the first quarter of 2014, the people said, after receiving licenses and setting up its office.

Guo and Robinson will likely get as much as USD1.2 billion from Millennium and another USD200 million from external investors. The launch will break the record set by former Goldman Sachs trader Morgan Sze, who started Azentus Capital in 2011 with USD1 billion.

The hedge fund will invest in bonds and other fixed-income instruments, as well as rates. The fund, which will invest in both Asia and other markets across the globe, will follow the relative value strategy, which seeks to exploit price discrepancies between different securities by entering into simultaneous long and short positions.

Millennium, founded in 1989 with USD35 million by Israel Englander, manages USD18.6 billion. The firm relies on a group approach where dozens of smaller portfolio teams, rather than one or two main managers, buy and sell securities quickly, often thousands of them at a time.

The launch comes as a morale booster for the industry where service providers such as prime brokers and fund administrators have faced muted activity.

Overall, the number of new fund launches in Asia in the first half of 2013 fell to 51 from 71 during the same period last year, making it the worst period for start-ups since 2009, according to data from industry tracker Eurekahedge.

While the global hedge fund industry has recovered from the impact of the 2008 financial crisis, Asian hedge funds' assets are still about USD35 billion below the peak level hit in January 2008, Eurekahedge data showed.

Global equity markets gained and bond prices fell yesterday after business surveys from around the world revealed a global economy in expansion, helping cement expectations the Federal Reserve will trim its bond-buying stimulus program in September.

Purchasing managers surveys showed better-than-expected growth in the Euro zone, a rebound in China's vast manufacturing sector and US manufacturing activity rising to a five-month high in August.

Data from the US Labor Department also showed the number of Americans filing new claims for jobless benefits held near a six-year low last week, adding to signs the US economy is starting to find a firmer footing.

While weekly initial claims for state unemployment benefits climbed 13,000 to 336,000 - just above the level expected by economists in a Reuters poll - the four-week moving average fell to its lowest level since November 2007.

The four-week average, seen as a better gauge of labor market trends, suggested the US economy was growing enough to fuel steady improvement in jobs data.

However, the report did not change the view that the Fed will begin to trim, or taper, its monetary stimulus next month.

Global equity markets rose, with major European indexes up more than 1 per cent.

MSCI's all-country world index rose 0.46 per cent, while the FTSEurofirst 300 index of top European shares rose 0.94 per cent to close at a provisional 1,219.03

Further reading



Upcoming events

2 days 17 hours from now - London
4 days 17 hours from now - London
1 week 2 days from now - Rhode Island
1 week 2 days from now - Rhode Island
1 week 3 days from now - Boston

Upcoming training