21/04/2010 Author: Elana Margulies

Brazil growth sparks a raft of launches

Brazil’s developing hedge fund industry is moving apace, with a series of new launches poised to trade both globally and regionally, HFMWeek can exclusively reveal.

Plural Capital, a Brazilian-based Banco Pactual spin-out, whose asset management division has $500m, is gearing up to launch three offshore funds next month. Meanwhile, Geribá Investments, a New York-based Brazilian private equity firm, is opening up its maiden hedge fund to outside investors.

Last month, HFMWeek reported that Morgan Stanley’s prime brokerage unit was setting up a Sao Paolo office to take advantage of opportunities in the region.

Brazil side-stepped the global debt crisis and has emerged far stronger as an economy, capturing a significant amount of global GDP share. A sign of the region’s growing sophistication is that managers are not just launching domestically focused emerging market funds.  

The Plural Capital Global Macro Fund will invest in G7 countries, along with Norway and Brazil. It will trade mostly sovereign debt, along with country and sector indices. At any given time, the fund will hold three to five long-term positions.

Another new launch, the Plural Capital Brazil Fund, will trade equities in Brazil through American Depositary Receipts (ADR) or buy local equities and assets in Brazil through swaps. It will also trade the Brazilian real and the fixed-income universe.

The third offering, the Plural Capital Brazil Long Equities Fund, is a long-bias strategy that will trade only equities. It will have 10-20 positions. All three of these offerings are segregated portfolios within a segregated portfolio company and will launch with 150m in total. All three funds have $1bn capacities.

Meanwhile, the Geribá Long Short Fund debuted in December and will target worldwide investors. The fund rolled out with $5m and will soft-close at 400m. Ultimately, it has a capacity of $1bn. It has 20-30 long and 20-30 short positions, investing across a range of sectors and market capitalisations.

James Gulbrandsen, principal, said the firm decided to open the fund to external allocators given the burgeoning opportunity set in the country.

“There is the 2014 World Cup and 2016 Rio Olympics that will drive infrastructure growth,” he said. “As developed economies continue to struggle with the burden and aftermath of sovereign debt, Brazil will thrive compared to other nations.”