group creates strategic partners fund, which is a fund of funds investing mainly in european-based early stage hedge fund managers
Liberty Ermitage has launched the Strategic Partners Fund, a fund of funds mainly investing in European-based early-stage hedge fund managers.
The fund is being seeded with $50m of proprietary capital and will generate returns from both the underlying hedge fund strategies and equity, or similar economic participation, in the underlying fund management partnerships.
The fund will partner with hedge funds across a range of both directional and spread-based strategies.
Liberty Ermitage will offer distribution, business and technical advice to their hedge fund partnerships and in return will have representation on the individual hedge fund boards.
Ian Cadby, group executive director in charge of strategic investments, said: 'It is typical for funds of funds to insist on transparency at hedge fund level, but how many of them offer transparency at the business level?
'We designed this product to offer our institutional investors the maximum level of transparency possible. As a professional hedge fund investor, Liberty Ermitage will be partnering at the business and fund levels, without conflicting with the managers' day to day responsibilities.'
Investors in the Strategic Partners Fund will be invited to join a monthly forum to discuss all aspects of the underlying hedge fund activity with each of the managers.' Jonathan Wauton, director and co-architect of the product, explained the additional advantage of this product is the return on the 'free equity' received from the fund management companies.
Investors will in effect 'double dip' into future revenue streams, as they will receive returns from the underlying hedge fund strategies and share in the dividends received from economic participation in the hedge fund management partnerships. Additionally, Liberty Ermitage will also negotiate capacity levels with the manager, Wauton added.
Now is the time to step up investments in early stage managers, as the current environment has led to attractive seeding opportunities, Cadby said.
The fund has already attracted significant interest from institutional investors, ranging from US pension funds and foundations to US and European investment banks, according to the group.
The initial offer period is expected to run from 1 December 2002 to 31 March 2003, with the first subscription period set for 10 February. Given the current levels of interest it is likely that the first subscription period will close early, the group believes.
The Strategic Partners Fund will charge a 1.5% annual management fee and an incentive fee based on 25% of the equity or other economic participation.
Minimum subscription has been set at $10m although the manager has discretion to scale the entry levels.
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