London-based Merchant Capital has had a busy year since it launched its Merchant Funds plc UCITS-III platform at the start of the year.
London-based Merchant Capital has had a busy year since it launched its Merchant Funds plc UCITS-III platform at the start of the year. The Dublin-based umbrella, which stands out from the crowd with the speed (typically six to eight weeks) and efficiency it is able to onboard hedge funds looking for a UCITS wrapper, is in the process of adding four more funds to join its first member Tressis SV. One of which, Galaxy Asset Management’s equity L/S fund, is due to launch in September. “Another four have been earmarked by year-end so I’ll be disappointed if we’re not in double figures by next year,” George Cadbury, Director of Funds at Merchant Capital, tells Hedgeweek. “If everything goes to plan we estimate to have EUR250-300 million in AuM by year-end. However, each potential client must first successfully complete our UCITS SAFE programme to see if both the manager and the strategy work well using a UCITS wrapper.” Merchant’s biggest initiative right now is building out its distribution channels to help clients tap into the estimated USD7 trillion UCITS market. “We could do it internally but what we’re tending to do is align our interests with distributors that have a particular regional focus (e.g. Germany/Austria); we believe that is the best way moving forward for our clients,” explains Cadbury. Unsurprisingly, with Galaxy’s imminent launch, finding a suitable Asian distributor is also underway. Cadbury notes that 35 per cent of the clients he’s talking to at the moment are US-based, which suggests UCITS is becoming a more palatable option stateside. But as the newcits boom continues, Cadbury points out that not all funds are necessarily suitable. “We’re focused on managers like Galaxy who run existing funds rather than those trying to launch new ones. Not all managers feel comfortable with the limited leverage and liquidity rules, which is why private equity, for example, will never be a hunting ground for UCITS.”