HedgeCo.Net (New York) – UBS’s deal to buy ABN Amro Holdings for $386 million, may be threatened by ABN’s $100 millioninvestment in hedge fund MotherRock, which collapsed last week.
MotherRock’s losses are putting ABN’s risk management and investment skills into question, which could result in the lowering of the price or even cancellaion of the proposed deal, which had been struck on May 25th this year.
Hedge fund Motherrock collapsed last week after a string of investment losses. In June, MotherRock plunged 24%, slashing its assets under management to about $280 million. The bad performance continued in the month of July, and then in August MotherRock was said to have lost almost $450 million of its assets under management.
MotherRock’s troubles stemmed from a series of bad bets on natural gas prices made with leverage, or borrowed money. Natural gas prices have been volatile in recent months.
Swiss powerhouse UBS has a futures business focusing on equities-linked products in Europe and said the ABN business would add fixed-income and commodities futures trading across the United States and Asia and help it attract more hedge-fund clients, making it a leading player in this fast-growing segment of capital markets.
The Dutch international banking giant ABN Amro Holdings has roots in 1917. The bank has more than 3,700 branches in 52 countries.
Alex Akesson
Contributing Writer
HedgeCo.Net
Email: Editor@hedgeco.net
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