24/11/2010 Author: Gwyn Roberts

Brevan sees ‘real appetite’ for new credit fund listing

Brevan Howard Asset Management is expecting a “high level” of investor interest in the run up to its new credit fund’s listing on the London Stock Exchange (LSE), according to the $28bn firm’s co-CEO.

With the prospectus for BH Credit Catalysts (BHCC) published this week, Brevan is planning to raise $150m for the mid-December IPO of the closed-ended fund. “There is a real appetite, primarily from private wealth managers,” the firm’s co-CEO, Nagi Kawkabani, told HFMWeek.

Listing on the LSE’s main market, BHCC is a multi-strategy credit fund, feeding into the strong-performing $1.1bn Brevan Howard Catalysts Master Fund, managed by David Warren of DW Investment Management, a US firm exclusively contracted to Brevan.

The fund will target investors that are wary of volatile credit markets and looking for a diversifier from long fixed income. “There are still hundreds of billions worth of securities in the hands of people that don’t want them and there isn’t the capital to lend them out”, said Kawkabani. “This creates pricing distortions across many aspects of credit – whether this be credit spread, or curve or credit basis or correlation assumptions – which the fund will exploit.”

The health of the listed sector has been mixed this year, with many vehicles trading at a discount and triggering shareholder continuation votes. However, Brevan’s two listed products have generally beaten their peers and are currently trading at a small discount of between -2% and -5%, compared to an industry average of -6.5% for single managers and -18% for funds of hedge funds (FoHFs).  

While interest in FoHFs has stayed static, listed single manager vehicles remain popular. With a number of long-only multi-asset funds believed to be looking at the sector, 2011 is expected to see a number of fresh share issuances from listed funds.