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Olympia’s merger with Kenmar addresses part of the company’s challenges, says Fitch

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Fitch Ratings says that the announced merger between Olympia Capital Management (M2) and Kenmar Group addresses part of the key challenges the agency has identified that Olympia is facing, notably enlarging operations to optimise operating profitability, diversifying its investor base and strengthening analytical research capabilities.

Restoring its financial standing remains one of the key challenges facing Olympia, as Fitch highlighted in November 2011. In Fitch’s view, the planned integration with Kenmar would place the combined group in a better position to ultimately achieve operating profitability thanks to a more critical and visible combined size (USD3.3bn of assets at end-April 2012, with a target of 65 staff in the integrated organisation), combined with potential cost synergies in the organisational, investment and operational domains. The combined entity would also benefit from a geographically-diversified investor base and a more competitive product offering, notably through Kenmar’s managed account platform and segregated mandate capabilities.

Fitch will monitor how the integration of investment capabilities will reflect on Olympia’s historical disciplined processes for hedge fund selection, portfolio construction and risk management. Fitch notes positively that research capabilities would benefit from expanded resources with more senior analytical profiles and a notable expertise in the CTA and global macro space.

Fitch identifies the main risks related to the integration process as including a risk that the transaction does not follow through and the departure of key staff. As such, the retention of key investment professionals will be a critical success factor through the integration process. Fitch will continue to closely monitor integration development and a full rating review will be completed in H212.

On 23 April 2012, Olympia and Kenmar announced their intention to merge their investment activities into a combined firm to be named Kenmar Olympia Group. The merger has been approved by the UK Financial Services Authority (FSA) and is still subject to the authorisation of the French regulator (AMF).

Wholly-owned by RPCHL since April 2011 and regulated by AMF, OCM has been managing FoHF since 1989. At end-April 2012, OCM managed about USD2bn in assets, around half of which 67% was in FoHFs, with a client base that was mostly institutional and concentrated in Europe. It employed 37 people, primarily in Paris, London and New York, of whom 12 were alternative investment professionals. OCM’s ‘M2’ asset manager rating excludes the Paris-based private banking and life insurance activities.

RPCHL is the holding company of Richmond Park Partners LLP (RPP), an independent merchant banking company founded in 2009. Domiciled in the UK, RPP is regulated by the FSA.

Founded in 1983, Kenmar is an independent, privately held alternative multi-management firm. The Kenmar Group is headquartered in Rye Brook, New York with additional offices in Richmond, Virginia and Singapore. Today, The Kenmar Group’s team includes 45 experienced professionals.


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