Emergent Preps Private Equity, Hedge Funds

May 5 2008 | 2:00am ET

Emergent Asset Management is planning a slew of hedge fund and private equity launches in the upcoming months.

The British hedge fund manager is prepping a global foreign-exchange fund for launch in June, and a global macro hedge fund for July. The firm is also launching its first private equity vehicles, focusing on farmland in Africa and defense and high-tech companies in the U.S.

A 25,000-Foot View
 
The firm’s Global FX Fund, which is backed by a U.S. investment bank, has already lined up a proprietary trader from an international investment bank as a manager. The fund will trade in cash, forwards, futures, and options.

The vehicle will debut while volatility in many of the U.S. dollar-crosses is falling to an all-time low, according to the firm.

“Currency, as an asset class, has provided only moderate returns in recent years in this low volatility environment,” the firm says. “However, we believe this period of low volatility has ended as a new global economic reality translates into major currency dislocations.”

Emergent is also prepping its Geo Macro Fund, based on its geopolitical model, according to Paul Christie, marketing director.

“We have a very fundamental and top-down approach and the current market environment is extremely fertile for the way that we trade so we expect to be fairly directional,” he said.

From Africa To Northern Virginia

On the p.e. front, Emergent is in fundraising mode for its Emergent African Land Fund, which will make long-term bets on farmland in sub-Saharan Africa and agriculture-related companies. The firm has partnered with Grainvest, a proprietary agricultural trading firm, to source investment opportunities in the region.

“Sometimes you just have to get down there and base yourself because you can’t just trade in and out of equities; you have to try and take a longer-term view,” Christie said. “We’re looking to profit from the appreciation of land values and we’re also looking to produce soft commodities and their derivatives.”

The five-year closed-end vehicle is looking to hold its first close with between €50 million (US$77 million) and €100 (US$155 million), and will hold its second close in July at around €500 million (US$777 million). Its third and final closing is tentatively set for November, by which time the firm hopes to raise another €500 million.

In addition, the firm is prepping its Corridor Private Equity Fund, which it touts as the “first and only fund designed to exploit the U.S. government's policy to direct funds each year to companies that are developing products for the departments of Defense and Homeland Security.”

To that end, Emergent has partnered with a Washington, D.C.- and New York-based p.e. firm to help source defense and hi-tech companies in the Northern Virginia area. The firm is looking to raise some US$200 million for the fund.

“U.S. government defense spending is robust and uncorrelated with macroeconomic factors that affect other private equity strategies,” the firm says. “Security concerns arising from geopolitcal tensions and terrorism will serve to support increased activity and spending in the fund's space.”

Emergent currently manages the Alternative fund, an emerging market debt and FX hedge fund, and the Ballistic Fund, an emerging market equities hedge fund. Both funds were reopened to outside investors in February after closing for several years and have returned an estimated 10.11% and 12.44% respectively year-to-date.

Susan Payne, who headed emerging markets sales and trading for JPMorgan and Goldman Sachs, founded Emergent in 1997. Toronto Dominion Bank holds a 10% stake in the firm.


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