UG Seeks $200M For China Closed-End Fund Arbitrage Vehicle

Apr 12 2007 | 11:47am ET

Shanghai- and Taiwan-based hedge fund manager UG Investment Advisers is looking across the Taiwan Strait for its next offering.

Enticed by opportunities in mainland China, especially those in closed-end funds, UG hopes to raise as much as US$500 million for a Greater China multi-strategy fund, focusing on closed-end fund arbitrage. Partner Richard Fan said that the fund will launch in the next three months if the firm is able to raise at least US$200 million for it.

“It’s in the very preliminary stages right now,” he said at a Reuters-sponsored hedge fund conference in Singapore.

The US$900 million firm’s current multi-strat offering, the UG Formosa Multi-Strategy Fund, is about 70% invested in Taiwan, Fan said, adding that the new fund would give it more flexibility to invest in mainland China.

UG already has more than half of its total assets invested there through China’s qualified foreign institutional investor program, but the new fund would target the more than 50 closed-end funds listed on China’s stock exchanges.

“The largest piece of the pie would be closed-end fund arbitrage,” Fan said. “This is one of our bread-and-butter businesses… We’ve been doing it in Taiwan since ’93.”

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