28/07/2010 Author: Ben Haidari

HFMWeek Daily Snapshot - 28 July

NEWSPAPERS AND WIRES
Hedge-fund operator RAB Capital slashed its dividend to conserve cash on Wednesday, as it reported another decline in the assets it manages from investor redemptions and poor fund performance, and said conditions continue to be tough for raising new investor capital, the Dow Jones Newsire reports. The London-based group, which managed $1.26bn at 30 June, down from $1.35bn at the start of the year, said assets have fallen further in July because of losses in its flagship Special Situations fund and from a European bank pulling cash from RAB's fund of funds. "It has been a tough start to the year with volatile markets impacting on investor allocation decisions, particularly for equity products. The company said it will pay a reduced first-half dividend of 0.10 pence a share, from 0.60 pence for the first half of 2009 and 0.50 pence for the second half of 2009”, said chief executive officer Stephen Couttie.  

Investment group B&G, which has listings on Euronext and the London Stock Exchange, said it had "been notified on an alleged breach of French insider trading regulations" in its B&G Gestion arm which advises the UK-based asset management division, reports the  Telegraph. The hedge fund, which was founded by two Goldman Sachs bankers Emmanuel Boussard and Emmanuel Gavaudan, said the matter had been passed onto the enforcement arm of the Autorité des Marchés Financiers (AMF). This is the second run-in with the Paris-based watchdog in as many years. Last February, the firm was fined for missing a three-day delivery deadline on shares it was selling short. The hedge fund group did not give any details of the charges beyond the fact that they relate to a "single transaction of a notional value of €1m ($1.3m)."

Billionaire financier George Soros is in discussion to buy a stake of 4% in the Bombay Stock Exchange (BSE), reveals the Wall Street Journal. According to people involved in the matter, it is a part of Soros' current interest in rising market shares. The federal regulators have yet to approve the deal by Soros Fund Management. According to Indian rules, foreign investors cannot buy stakes in local exchanges beyond 5%. Soros Fund Management, Soros' $27bn firm, is also planning to purchase Dubai Holding's 4% stake for about $40m. Soros and the team at his hedge fund have been cagey about US and European investments. However, they have been optimistic towards emerging market shares. Dubai Holding owned by the emirate's ruler Sheikh Mohammed bin Rashid al-Maktoum, had been looking to exit the BSE, according to the FT.

Parvus Asset Management had built up a holding equivalent to 18% of the support services company before its share price fell by 90% in a month, according to stock exchange disclosures, says the Telegraph. The hedge fund, run by former Merrill Lynch asset manager Edoardo Mercadante and backed by TCI, held 1.15% of Connaught in stock and the rest through contracts for difference. A 10%stake in Connaught that it controls is registered under the name of HSBC, its broker. Chris Hohn, the City financier and founder of TCI, helped to start Parvus, while Lord Rothschild is also believed to have backed the hedge fund. 

Citigroup may move a team of proprietary traders into its hedge fund unit, one of at least three alternatives the US bank is studying to comply with the Dodd-Frank Act, people briefed on the matter told Bloomberg. Traders in the Citi Principal Strategies unit, led by Sutesh Sharma, would be reassigned to Citi Capital Advisors, which mostly oversees money for outside investors, said the people, speaking anonymously because the talks are preliminary. The bank would set up the traders as hedge fund managers and seed their funds, then raise money from outside investors to redeem its stakes, the people said.

LAUNCHES
Ernesto Bertarelli, one of the wealthiest men in the world, is set to plough "hundreds of millions" into building a global asset manager, according to a source familiar with the situation, reports Financial News. Yesterday he took the first step, hiring Jon Little, vice-chairman of BNY Mellon Asset Management, to take charge of the business. Bertarelli's family office, Kedge Capital, said yesterday that Little will become chief executive of the business later this year. He will leave BNY Mellon on Friday this week, and after serving a period of gardening leave he will take up the position on 1 November.