Thursday, 28 July 2016
Last updated 3 hours ago
May 31 2007 | 9:39am ET
A trio of energy veterans is making a foray into the hedge fund space with the launch of a relative value energy fund. Houston-based ETG Equity on June 1 will unveil cross-commodity, relative value vehicle ETG Capital, which has exposure to commodities such as power, natural gas, crude oil and refined products.
The firm is currently marketing its maiden offering to funds of funds and will soon broaden its reach to institutional investors. According to co-founder Don Addison, the fund will commence trading operations when it raises between $25 million to $50 million.
“We think the platform is a very nice way for investors who don’t have very much exposure to energy to be able to participate [in the energy sector],” Addison says.
Addison and his partners are bullish on the North American electricity markets in the long term because of “structural inefficiencies that will start to manifest in the next 12 to 18 months.” They are also bullish on the natural gas sector and foresees that market trending back up to “potentially some of the highs we saw a year ago” within the next six to 12 months.
Going forward, Addison says that the firm’s long-term business plans includes incorporating emissions trading onto the platform. To jumpstart its operations, the firm has selected SunGard’s Kiodex, which provides trading, position keeping, risk management and operations services to hedge funds.
Prior to founding the firm, Addison served as a former vice president at JM Huber Corp., a supplier of engineered materials, natural resources and technology-based services. He is joined by cofounders Randall Gibbs, the former principal developer of Freebird Gas Storage, and George Lyon, the former head trader for Suez, a distributor of power and natural gas.
ETG Capital charges an annual management fee of 2% and an incentive fee of 20%.