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Alternative Market Briefing

More Australian hedge funds launch Listed Investment Companies (LICs)

Monday, December 05, 2016

Komfie Manalo, Opalesque Asia:

More hedge funds in Australia are launching Listed Investment Companies (LICs) mainly to obtain permanent capital while at the same time providing liquidity to investors.

A Listed Investment Company is listed on the ASX, the local Australian stock exchange and subject to ASX compliance and listing rules. Investors can trade it as any other stock, which also means that the price fluctuates. A buyer could buy a share of a LIC, representing a piece of a hedge fund portfolio, either at premium, par or at discount.

Bruce Tomlinson, Portfolio Manager at Sunsuper, a $35bn Australian superannuation/pension fund, is also on the Investment Committees of the Future Generation Investment Company which manages two Listed Investment Companies that invest in a number of Australian and global alternative equity managers.

Tomlinson added that asset raising can be very successful using LICs, in his case those two LICs raised over A$700 million. However, he also pointed out that "the communication effort is quite significant; there are monthly emails going out to shareholders; there are regular face-to-face briefings with road shows around the country; and they provide additional transparency on the underlying investment managers on a regular basis."

Tomlinson explained a special aspect of the Future Generation model is that the managers and service providers give their s......................

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