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By Beverly Chandler, Opalesque London:
A very specialist business which has risen on the back of the turbulence of 2008, is the hedge fund secondaries market, where illiquid assets in hedge fund side pockets are offered to specialist buyers with an appetite for long term investment.
London’s specialist alternatives secondaries broker, Cattegatt Capital, sees continued strong deal flow from investors and reports that as side pockets from better-known funds have been snapped up, investors are looking for value in more "esoteric" hedge fund strategies. Lars Lindqvist, Cattegatt’s founder reports a $200m of Q4 deal flow in the pipeline.
"Up to 2008 when everything got turbulent you had a well functioning hedge fund market with more than $1 trillion under management" he says. "You could invest your money and the manager would offer a structure with, say, monthly liquidity. But now you could be invested in 20 different side pockets of illiquid investments." It has been estimated that of that $1 trillion of assets under management in the hedge fund industry in 2008, at the time there was as much as $100bn in illiquid assets.
The solution is to call a broker in the secondary market, such as Cattegatt. "We will find a buyer" Lindqvist says, reporting that these illiquid assets can be positions in private companies or real estate projects or other specialist activities. "We find long term specialist investors who understands the specialist base."
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