Dexion Trading Moves To Change Sub Advisor

Jun 12 2007 | 1:19pm ET

Dexion Capital is parting ways with FRM Investment Management, the sub-advisor to its Dexion Trading Limited fund of hedge funds. The firm is hoping to replace FRM with The Permal Group, which manages over US$33 billion in assets.

“FRM is the existing manager of Dexion Trading Limited and its share price has been discounted,” Robin Bowie, Dexion’s chairman, told FINalternatives. “We’re looking at how to deal with that discount and we think if we have a manager with a very strong performance record that it will attract fresh investors, which Permal has. Shareholders are favorable towards the move but they have to vote on it.”

Dexion Trading’s shares traded at £1.0725 (US$2.10) yesterday before moving up to £1.1050 pence (US$2.16) after the announcement this morning.

Dexion’s board is looking to have Permal in place, subject to shareholder approval, effective Oct 1. Permal will manage the fund consistent with its Permal FX Financial & Futures Limited vehicle, which invests in underlying hedge funds trading in U.S. and international currency, futures, options, forward and other derivative markets.

Shareholders who choose not to continue with the new arrangement can redeem their shares at the prevailing NAV less an appropriate proportion of the costs and expenses in connection with implementing the changeover.

In conjunction with the changeover, Dexion will be launching additional shares in the fund for new and existing investors. It has set a minimum size of £50 million (US$98.3 million) for the fund but will consider not to go ahead with the changeover and will instead “put alternative reconstruction or winding up proposals to shareholders” if it can’t raise the £50 million target.

FRM, which has agreed to the changeover, says it believes that almost all of Dexion‘s current investment portfolio can be redeemed by Sept. 30.

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