Two London-listed hedge fund investment companies advised by HSBC Republic Investments Limited are seeking to raise further capital.
HSBC European Absolute Limited (European Absolute) and HSBC Global Absolute Limited (Global Absolute) are raising capital by way of a placing and offer for subscription sponsored by Dresdner Kleinwort Wasserstein Securities Limited.
The Absolute companies were launched in 2001 aiming to 'provide investors with attractive returns and lower volatility than is commonly associated with equities; European Absolute by investing in a diversified portfolio of hedge funds exposed to markets in Europe and the UK; Global Absolute by investing in a diversified global portfolio of hedge funds'. Both companies invest predominantly in equity long/short strategies.
"HSBC Republic Investments Limited has been advising on hedge funds since 1995 and our experienced investment team is one of the contributing factors for European and Global Absolute's strong track records,' says Tina Hugo, Head of UK Distribution, HSBC Republic Investments Limited. 'We have seen a continuous demand for shares from both institutions and private clients and these share issues will meet the demand from existing shareholders, as well as enabling us to attract new investors.
"Fund of hedge funds products such as European and Global Absolute allow investors to benefit from diversified investment in an asset class normally characterised by high barriers to entry. Both companies have historically improved the risk-adjusted returns of an equities portfolio. Using European Absolute as an example, since inception in April 2001 to the end of April 2006, the annualised returns were 7.3% with a volatility of 4.3% versus annualised returns of 11.2% and volatility of 15.1% for the comparative index* over the same period."
With the proceeds from the placing and offer, it is envisaged that European and Global Absolute will maintain significant allocation to equity long/short managers while also seeking to take advantage of new investment opportunities. HSBC Republic Investments Limited believes that the Absolute products allow investors to diversify away from traditional asset classes with the potential of enhancing the risk/return profile of their overall portfolio.