Dexion Absolute Limited, the London-listed fund of hedge funds, is raising further capital by issuing up to 150,000,000 C Shares at 100p per C Share.
The issue and the commencement of dealings in C Shares is conditional on the passing of the resolution at the extraordinary general meeting of the company to be held on 28 June 2004.
This fund raising is the third on the back of substantial demand for the shares. Dexion Absolute has so far delivered against its mandate despite turbulent market conditions, and the shares have traded at a NAV premium of 6% since listing in December 2002. Key investors in Dexion Absolute include CIS, Merrill Lynch, Rothschild, Barclays, CSFB, Barings, and Rathbones.
As at 30 April 2004, the net assets of Dexion Absolute, a low volatility fund of hedge funds, were approximately GBP 108.5 million, substantially all of which were invested in a diversified portfolio of 48 hedge funds across 7 hedge fund strategies.
Dexion Absolute's investment objective is to provide shareholders with consistent capital appreciation, with a target US dollar annualised return of 12 per cent. to 15 per cent.†‡ in any three to five year period, independent of equity market direction and with low volatility.
The listed fund of hedge funds seeks to achieve its investment objective through investment in an actively managed portfolio of hedge funds, diversified by investment strategy, style and manager.
Dexion stated: "In the Company's first full financial year to 31 December 2003 the NAV of the Company appreciated 12.58 per cent. (in sterling terms). In the period from 1 January 2003 to 30 April 2004, that return had fallen to an annualised rate of 11.39 per cent. (in sterling terms) principally because of particularly difficult market conditions during April 2004. Whilst that is marginally below the company's target annualised return, the manager and investment adviser (Chicago-based Harris Alternatives LLC) remain confident that the company will achieve its target annualised return in any three to five year period."
The company believes that discretionary private wealth management groups, that currently comprise a large proportion of the company's investor base, together with insurance companies and pension funds are likely to continue to increase investment allocations to hedge funds and funds of hedge funds such as Dexion Absolute.