WEST PALM BEACH, FL (www.hedgeco.net) – Hedge funds may soon be lining up to list their firms on the European stock exchanges, according to new reports. Hedge fund valuations remain at peak levelsand many top funds may try to take advantage of such high valuations to list on the exchanges.
Luc Estenne, Chief Executive at hedge fund investment adviser Partners Advisers in Geneva said, “If someone wants to retire … There’s no value in closing down (liquidating the fund).” Already some managers have listed their firms with the London Stock Exchange. One of such firms was the London based hedge fund manager, RAB Capital listed on the London Stock Exchange last March. Estenne explained the potential benefits of such listing by saying, “RAB Capital is listed, therefore you can see their capitalization, their assets and how much money they generate. It’s significant … (Listing) is another way to retain and incentivise people.� Mike Cuthbert, an analyst at Bridgewell Securities, said “To crystallize that sort of valuation is attractive … Valuations of a lot of traditional fund managers are in the region of 1.0-2.5 percent,” adding, “We could get a new sector in quoted hedge funds.”
Some analysts believe valuing hedge funds could present challenges, since a significant portion of the fund�s revenues come in by way of fees such as the performance and annual management fees. But with the interest of major investment banks in acquiring hedge fund firms, such trend may accelerate in the years to come.
According to Huw van Steenis an analyst at Morgan Stanley, �It’s easier to forecast recurring income than performance fees which vary … How to value performance fees is an issue,” according to him. Jason Streets, analyst at UBS, said, “Valuing performance fees is a tricky business because they can be substantial, very volatile and often impossible to predict.�
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
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