HSBC European Absolute Limited (European Absolute) is to raise extra capital with a placing and offer for subscription of Sterling Hedged and Euro shares.
The offer is sponsored by Dresdner Kleinwort Wasserstein Securities Limited.
Launched in April 2001 to provide investors with attractive returns and lower volatility than is commonly associated with equities, European Absolute, the London-listed fund of hedge funds investment company advised by HSBC Republic Investments Limited, has achieved its objective by investing in a diversified portfolio of hedge funds (predominantly in equity long/short strategies) exposed to markets in Europe and the UK.
"HSBC Republic Investments Limited has been advising on hedge funds since 1995 and is one of the most experienced players in the European hedge fund space," says Tina Hugo, Head of UK Distribution, HSBC Republic Investments. "This is one of the contributing factors for European Absolute's strong track record versus European equities since inception. Consequently, this has resulted in continual demand for shares most notably reflected in the current market premium."
According to Hugo, the further share issuance will meet the demand from existing shareholders and enable the firm to attract new investors.
"A fund of hedge funds product such as European Absolute allows investors to benefit from a diversified investment in an asset class normally characterised by high barriers to entry," she says." Historically, an investment in European Absolute would have improved the risk adjusted returns of a European equities portfolio. Since inception in April 2001 to the end of September 2005, the annualised returns were 5.9 per cent with volatility of 3.9 per cent versus annualised returns of 0.03 per cent and volatility of 16.8 per cent for the MSCI Europe Index (Gross in EUR) over the same period."
With the proceeds from the placing and offer, it is envisaged that European Absolute will maintain its significant allocation to European equity long/short managers whilst also seeking to take advantage of new investment opportunities. HSBC Republic Investments Limited believes European Absolute allows investors to diversify away from traditional asset classes with the potential of enhancing the risk/return profile of their overall portfolio.
Background notes: HSBC European Absolute Limited, a London-listed, Guernsey-domiciled closed-ended company, had a market capitalisation of EUR 33 million as at 30 September 2005
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