New York (HedgeCo.net) – Merchant Capital Ltd. is to launch a UCITS III umbrella structure that will provide hedge fund managers, including small to mid-sized firms, with a cost effective vehicle for running their own UCITS III funds.
Historically, it has taken between three and six months to construct and bring to market a UCITS product. Merchant says funds using their platform will take approximately four to six weeks, while also reducing the high fees the process normally incurs and fulfilling all necessary counterparty requirements.
Tressis SV (Tressis), Spain’s leading independent distributor of investment funds, structured products, fixed income and other financial products, has selected Merchant Capital as its UCITS III umbrella provider. The company is due to launch a European equity long/short strategy on the platform. Tressis has over €1.7 billion ($2.5 billion) of assets under distribution, of which €600 million ($884.8 million) are under direct advisory contracts. The firm has an extensive network of IFAs throughout Southern Europe and Latin America.
Commenting on the launch, José Miguel Maté, CEO of Tressis SV, said: “Merchant Capital was selected on the basis of being able to deliver exactly what was required for Tressis’s first venture into UCITS funds, including meeting a tight deadline for launch.”
Hedge fund managers using Merchant Capital will not be required to pay a standard minimum entry fee and will also benefit from significantly reduced legal and administrative costs. The UCITS III umbrella structure will also allow the manager the freedom to seek competitive SWAP rates in the market place and take advantage of competitively-priced agreements in place with some of the market’s leading providers.
Additionally, the company will enable investors and managers alike to reduce the counterparty exposure inherent in partnering with a single institution; a manager using an existing platform offering the full range of services under one roof can be subject to significant counterparty risk.
Merchant Capital will supply hedge fund managers with all the controls and systems required to manage a UCITS III fund. As well as risk management and middle office support, Merchant Capital also provides company management, regulatory infrastructure and compliance oversight.
An independent board of trustees is to be provided, along with an independent administrator, custodian, accountant and oversight of all legal documents. Merchant Capital, however, does not at this point supply feeder capital like an incubation platform. The firm simply offers a solution through which clients can seamlessly manage their UCITS III product, while the necessary operational and compliance support is provided by Merchant Capital.
The co-founders of the asset management division of Merchant Capital are Christopher Day and George Cadbury. Christopher Day, Director of Merchant Capital, was previously a founding partner and Chief Executive of PCE Investors, a business responsible for analysing and establishing over 40 hedge funds whilst providing all middle and front office systems and regulatory cover. He has been an investment manager for over 20 years, with high level experience of management in a wide range of investment areas. He was Managing Director of Thornton Management (Asia) Limited, Dresdner Bank’s Asian investment business. Responsible for both investment and marketing, Christopher Day was instrumental in the business’s rapid growth in assets and by 1997 the business managed $2 billion in seven countries in the Asia-Pacific region.
George Cadbury, Director of Merchant Capital, was previously President and Head of Business Development at PCE Investors Limited and prior to that Managing Director of the UK business of Ubequity Capital Partners, a Canadian private equity group, where he headed a hedge fund marketing operation as well as being responsible for Ubequity’s UK investments. He began his career at Banco Spirito Santo in Madrid.
The company will be working closely with PNC Global Investment Servicing, a leading provider of processing, technology and business solutions to the global investment industry, to provide its funds with administration, custody and trusteeship services.
Mark Mannion, Managing Director of PNC Global Investment Servicing (Europe) Limited, said: “Merchant Capital is providing a vital service to the fund industry to accommodate the specific demands of each individual fund. We look forward to providing them with a range of services that will enhance this initiative.”
George Cadbury, Director of Merchant Capital, added:“Merchant Capital has created a solution to the many problems faced by managers in trying to access the UCITS market. Many traditional investors from all over the world are now indicating a preference to invest in a UCITS structure, but unless you are a multi-billion dollar fund the barriers to entry are high.”
About Undertakings for Collective Investments in Transferable Securities (UCITS III)
A UCITS structured fund gives investors minimum bi-weekly liquidity; daily pricing; assets held by a trustee, not an administrator or a prime broker; an independent fund board; higher standards of corporate governance and oversight; and a larger investor base.
Editing by Alex Akesson
For HedgeCo.net
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