July 2023

The Financial Times' Harriet Agnew has written an unflattering article on Lansdowne Partners, in which she compares the firm to the success and growth of Marshall Wace. The piece, titled 'A Tale of Two Hedge Funds,' looks at the two businesses that were launched at the same time but in recent years have gone down different paths.

Hedge funds looking to expand their horizons are turning to Dubai with a sense of optimism at a time when they see more challenging operating environments in more established markets. Dubai and Dubai International Financial Centre (DIFC) have set themselves apart with a powerful confluence of ecosystem benefits.

The Dubai International Financial Centre (the DIFC), a financial free zone within the Emirate of Dubai, is the largest financial services centre in the Middle East, Africa and South Asia (MEASA) region. In recent years, a growing number of hedge fund managers have been attracted to the DIFC as a result of various pull and push factors.

For almost two decades, the Dubai International Financial Centre (DIFC) has been positioning itself as a leading financial hub in the Middle East and North Africa (MENA) region. While it has a strong presence in various sectors, including banking, finance, and insurance, the DIFC has also been actively promoting itself as a hub for asset management.

Pairing a Cayman Islands fund with the credibility associated with a DFSA-regulated manager is often considered the best of both worlds approach, leveraging the respective benefits of the relevant offshore and onshore jurisdictions.

The past year has seen plenty of noise regarding alternative investment funds, including some of the largest names in the hedge fund industry migrating to the United Arab Emirates (UAE). The region is mounting a real charm offensive, with regulators and authorities taking advantage of the recessionary environment in the UK and US.

CVC Capital Partners is closing in on a $30 billion fund-raise. Private Equity International reports that this is set to 'be the largest ever private equity fund.' This is for CVC IX, a leveraged buyout fund focusing on medium and large European and North American businesses.

Another manager to successfully raise decent sized funds is TA Associates that has closed its latest at $16.5 billion. The Boston firm launched its 15th Global Private Equity Fund in November last year, which has been oversubscribed, exceeding its target size.

Ardian has also had a good fund raise, with $20 billion for a secondaries fund. This will take stakes in private equity vehicles, which is good timing with a number of stressed/illiquid investors. The French firm today manages $150 billion.

For every big fund raise, there are sadly dozens that disappoint. One of which is an Insight Partners fund that has been dramatically cut back. The New York-based VC firm was looking to raise $20 billion but has only got as far as $2 billion.

Carlyle Group's new CEO, Harvey Schwartz, is looking to stamp his mark on the firm as he calls for greater capital markets expansion. This move is good news for the PE giant, which has lacked clear direction over the past year and has seen its stock price fall almost 50% from its peak in November 2021.

In a rare interview, Silver Lake co-CEO, Egon Durban, spoke to the Financial Times about the firm's strategy. Durban said they are looking to focus on 'fewer but larger investments,' which is a different approach to many other firms in the sector.

After a few painful years, Tiger Global Management is back in the market, looking to raise new funds. Unfortunately, they are finding the fund-raising environment not as easy as they once did when investors were hammering at the door to invest.

The trouble in these markets is finding the right kind of deals. Looking at the UK, there were only 59 deals in the first half of the year, totalling a paltry £4.4 billion, compared with £22.1 billion in the same period a year ago, when there were 113 deals.

One of the biggest stories in June, or at least the one that got the most column inches in the UK, was the downfall of London-based Odey Asset Management. First came the Financial Times expose, which was not all new scoops but pretty damning in one article.

Andurand's year goes from very bad to very, very bad. Unfortunately for Pierre Andurand, Bloomberg is closely monitoring his performance and according to the wire, his discretionary leveraged fund is now down 50.8% to 23 June 2023.

Brevan Howard's Trifon Natsis - the 'N' in Brevan - has become the latest big-name manager to jet off to the UAE. The 63-year-old is moving to Brevan's newly established Abu Dhabi office, first announced in February.

The South Korean government has been told to pay Elliott Investment Management $108.5 million. This order comes from the Ministry of Justice and dates back to the 2015 merger of two Samsung units, Cheil Industries and Samsung C&T.

Elliott Investment Management was relatively quiet for a few months, but is back with plenty of noise. Another very live action is its position in Houston-based NRG Energy, where they want to see big changes and has rolled out the usual playbook.

Speaking at SoftBank's AGM, Masayoshi Son said that the Japanese investment firm is set to go on the offence. It was the first time Son has been in public for several months, having stepped back to focus on ARM Holdings, but comes as Vision Fund lost $32 billion.

News that Man Group has agreed to take a controlling interest in Varagon Capital Partners, a US middle market private credit manager, shows that the private credit market is in rude health. Man is paying $183 million in cash from internal resources for a 73% stake in the business.

The war for talented asset managers is hotting up, with remuneration going through the roof. Bloomberg has reported on Marshall Wace adding a new client fee - not that Marshall Wace has ever been backwards in coming forwards - to pay for ever more expensive talent.

There is a severe rift at Two Sigma between the co-founders. This particular story should never have seen the light of day, for it is a humiliating own goal for the quant manager, with the Wall Street Journal sourcing it from a March 2023 filing.

Hedge funds have been struggling to stem the outflows and May was more of the same. Nasdaq eVestment data reveals this was the 12th consecutive month of outflows and the worst May since 2009, with $10 billion leaving the space.

Crypto appears to have the wind behind it again, with Bitcoin sitting comfortably above $30k. There also seems to be increased institutional support. And now a spot bitcoin ETF may finally get approved, with BlackRock seemingly quietly confident that they will break the industry duck.

For the first time, exchanges based in the USA and Switzerland fall under the auspices of the UK's criminal insider dealing regime. New York Stock Exchange, NASDAQ and SIX Swiss Exchange were added to the framework due to the detection of a persistent trend of organised crime groups recruiting UK insiders.

As part of its Quarterly Consultation, No 40, the FCA has proposed some clarifying amendments to the MIFIDPRU prudential regime. These relate to the ICARA and the own funds and liquid assets threshold requirements.

Institutional investment managers who file a Form 13f with the SEC will need to collate its proxy voting record to disclose how they voted on executive compensation, or so-called say-on-pay matters. The SEC will not require 13f filers to begin filing the new Form N-PX to disclose such data until August 31, 2024.

The SEC's Division of Examinations published a Risk Alert informing registered investment advisers of additional areas of focus for exams based on the new Marketing Rule. The Division continues to focus on a firm's policies and procedures, the substantiation requirement, performance advertising requirements and books and records.

The SEC charged a New York-based private equity fund adviser with charging excess management fees and failing to disclose to investors a conflict of interest relating to its fee calculations. From August 2017 through April 2021, the firm charged excess management fees by calculating fees based on aggregated invested capital.

The U.S. District Court for the Southern District of Florida on June 21 2023 entered an order of final judgment against Rico Cox, resolving the CFTC's May 31, 2022 lawsuit against Cox and finding him liable for fraudulently soliciting investments in commodity futures and misappropriating at least 14 pool participants' funds.