Wednesday, 22 October 2014
Last updated 16 hours ago
Oct 2 2013 | 12:55pm ET
Chenavari Capital's existing "regulatory capital relief" fund earned 37% last year—and investors have rewarded it with pledges of US$200 million towards a new listed fund.
The London-based hedge fund plans to launch a London-listed vehicle to take advantage of what it expects to be more than US$6 billion in regulatory-capital deals next year. The Capital Solutions Fund will charge banks premiums to allow them to apportion losses against pools of assets to Chenavari. The banks will be on the hook for the first 1% of losses, with Chenavari absorbing the next 10%, allowing the banks to reduce their required capital reserve level.
Chenavari will target annual returns of 12% for the new fund.
"For many capital solution transactions involving a layering of risk or a risk transfer, the bank will seek prior approval from its regulator," Chenavari founder Loïc Fery told the Financial Times, seeking to head off criticism that such deals are similar to those that helped fuel the financial crisis. "It is better that risks stay in a 20-time levered, systematically-important banking institution, or is it better that the risks sit with a non-levered fund or investment vehicle?"
Chenavari's two-year-old European Regulatory Capital Fund has about US$1 billion in assets. "We wanted to raise more capital and diversifying our investor base in the listed space was one way to do it," Fery said.
"Chenavari funds have invested in a significant number of capital solutions in the past 18 months," he explained. "There has been huge balance sheet inflation for European banks—the deleveraging requirements are particularly large."
Sep 22 2014 | 4:15pm ET
"I tell people that everybody likes good news and so if you have good performance that’s wonderful,” explains Mike McKitish of Peddie School's endowment, “but it’s the people that want to talk about the bad news or where they drifted and how they came back and how they stayed to their discipline…” that he wants to hear from. Read more…
Sep 30 2014 | 9:29am ET
The crisp Autumnal days of October are upon us, and so are a few of the hedge fund industry’s favorite charitable events. If you have never been to Rocktoberfest, well, you are missing out. And for a quieter evening of sipping and socializing, stop by HFC’s Wine Soiree. Read more…
Most traders agree that proper risk management is the key to successful trading. However, many traders depend on the deeply flawed measure of standard deviation as a benchmark of risk. Here we put it ...