Brevan Howard Capital Management is set to list a new investment company, BH Credit Catalysts, on the London Stock Exchange.
BH Credit Catalysts will be a closed-ended, Guernsey-incorporated investment company, proposed to have a premium listing on the Main Market of the London Stock Exchange in December 2010.
The company, a feeder fund, will invest substantially all of its assets in Brevan Howard Credit Catalysts Master Fund, an open-ended, Cayman-incorporated investment company which commenced operations in June 2009.
Shares will be offered to sophisticated investors and will be denominated in USD, EUR and GBP currency classes. Other currency classes may be offered subject to demand.
Proposed fees at company level are an annual two per cent management fee and an annual 20 per cent performance fee, subject to a high water mark.
There is also a proposed annual partial capital return mechanism, which may be exercised at the sole discretion of the directors, of between 33 to 100 per cent of annual NAV appreciation and a discount control mechanism with a five per cent trigger.
BHCC seeks to generate high absolute returns through directional and relative value catalyst-driven trading across corporate and asset-backed credit markets.
BHCC has a fundamental research-driven approach and a catalyst-focused trading style, rather than buy-and-hold or deep value or carry basis.
The investment manager of BHCC seeks to maintain a high degree of diversification across credit strategies and risks. Stop losses are applied to individual trades and also at trader and fund level.
The manager of the company will be Brevan Howard Capital Management.
The investment manager of BHCC is DW Investment Management, a credit manager located in New York.
Nagi Kawkabani, chief executive of Brevan Howard Asset Management, says: “We believe investors will respond well to this opportunity. The credit market is large and there is not enough risk capital available. Brevan Howard therefore believes that the opportunity set within credit markets for a trading strategy is significant. The DWIM credit team has generated consistently positive returns (quarter-on-quarter) since April 2008 across a wide range of market conditions. The team’s strategy (applied to BHCC since June 2009) has acted as a diversifier to other credit strategies by demonstrating a low correlation to credit market movements.
“As a listed feeder fund of BHCC, BH Credit Catalysts Limited should allow a wider range of investors access to this hedge fund credit strategy.”