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London-listed FoHFs plan to raise over USD 1 billion

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Goldman Sachs, Dexion Absolute and CM Advisors are separately planning to raise a total of over USD 1 billion from London-listed closed end FoHFs this year.

Goldman Sachs Asset Management (GSAM) announced earlier this week that is preparing for the launch of a London-listed fund of hedge funds. The news of GSAM’s launch into the listed FoHF market comes in a week when London-listed Dexion Absolute Limited announced that it is also considering a further fundraising in response to new and existing investor demand, and Swiss-based CM Advisors Ltd (CMA) also announced plans to list a new FoHF vehicle, CMA Global Hedge PCC Limited, on the London Stock Exchange.

These three London-listed FoHFs are expected to raise well over USD 1 billion in total with Dexion planning to raise between USD 200-300 million, GSAM planning to raise USD 400 million, and CMA planning to raise USD 500 million.

GSAM said that its new closed-ended investment company, Goldman Sachs Dynamic Opportunities Limited, ‘would give investors access to some of the most talented hedge fund managers globally, many of which are hard to access’.

The fund will be a concentrated portfolio with a core allocation to high conviction, established managers drawn from the spectrum of hedge fund strategies. It is expected that at launch the fund would have a satellite allocation of around a third of assets to more niche investment areas.

The fund will be managed by Goldman Sachs Hedge Fund Strategies, which has 37 years of experience in hedge fund investing and is distinguished by its dynamic portfolio construction and thoughtful risk management. HFS has hedge fund assets under management of over USD 15 billion. It is part of Goldman Sachs Asset Management (GSAM), which manages over USD 70 billion of alternative assets.

Kent Clark, Chief Investment Officer of HFS, said: ‘HFS has a 37 year track record of working with the leading hedge funds from around the world, accessing established names as well as new talent. We are excited that Goldman Sachs Dynamic Opportunities will bring so many elements of our history and investment knowledge to investors in one investment vehicle.’

The launch is expected to take place in the summer of 2006. The issue will be sponsored by Hoare Govett Limited, a member of the ABN AMRO Group. For selected territories outside of the UK, an offer will be made by private placement.

Dexion Absolute, currently the world’s largest and most liquid exchange-listed fund of hedge funds, with aggregate net assets in excess of GBP 535 million (USD 1 billion) and a constituent of the FTSE 250 index, is planning a share issue that will be the fifth capital raising for Dexion Absolute Limited since its launch in December 2002.

In the period from December 2002 to May 2006, the net asset value of Dexion Absolute appreciated at an annualised rate of 9.84% (with annualised volatility of 3.21%).  Aided by continued strong asset performance and ongoing secondary market demand, the Company’s ordinary shares have traded at an average premium to net asset value of 3.71% over the same period.

Dexion Absolute’s shareholder base, across Euro, Dollar and Sterling shares classes, now comprises a broad range of international investors including insurance companies, pension funds, private wealth managers and discretionary asset managers in eleven jurisdictions across Europe and Asia.

CM Advisors (CMA) is planning to list Global Hedge PCC Ltd (CMA Global Hedge), during the third quarter of 2006. Sabby Mionis, CEO of CMA, said: ‘Private investors will have the opportunity to access CMA’s top-performing fund of hedge funds strategy and institutional investors unable to invest in hedge funds will benefit from the choice of share currency denomination and the daily liquidity that a listed closed-ended investment structure brings’.

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