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CQS to list Diversified Fund on the LSE

Monday, October 18, 2010
Opalesque Industry Update - CQS today announces its intention to establish CQS Diversified Fund Limited (“CQS Diversified” or the “Company”). It is intended that the Company, once established, will seek admission to trading of its ordinary shares (“Shares”) on the Main Market of the London Stock Exchange plc through a proposed placing to institutional investors in the UK and elsewhere and offer for subscription to the public in the United Kingdom.

Key Highlights
􀂾 Overview – the Company will provide direct exposure to CQS managed funds: CQS is a credit-focused, multi-award winning hedge fund manager with a strong 10 year track record

􀂾 Multi-Fund – the Company will invest substantially all of its assets into CQS Diversified Fund (SPC) Limited, Segregated Portfolio Alpha (“DVA”), an existing dynamically managed fund of CQS managed funds launched in March 2007

􀂾 Convertible and Credit focus – DVA provides exposure to a range of CQS-managed hedge funds; currently invested in 5 convertible and/or credit-focused strategies

􀂾 DVA performance – net returns over last 12 months of 15.67%1 and annualised net return since inception of 10.18%

􀂾 Market opportunity – CQS believes that there is an excellent current opportunity set in specialist convertible and credit strategies; volatility in credit and equity markets and ongoing dispersion of credits are creating attractive idiosyncratic opportunities

􀂾 No additional layer of fees – no management or performance fees to be charged at the Company or DVA level

􀂾 Immediate investment – full investment into DVA on the first monthly dealing day following admission

􀂾 Discount control – continuation vote if shares trade at an average annual discount of 5% or more for any rolling 12 month period; separate authority to buy back up to 14.99% of issued shares

􀂾 Share class – single class of GBP denominated shares; issue price of £1.00

􀂾 Listing costs – to be capped by CQS at 1% of gross IPO proceeds at launch; opening NAV of £0.99.

􀂾 Rebate arrangements – available for large subscriptions

􀂾 CQS participation – CQS intends to participate in the IPO with anticipated future participation thereafter

􀂾 Wholly independent board of directors – no CQS representation on the Board

Michael Hintze, CEO and Senior Investment Officer of CQS, commented:
“This is an exciting and significant new development for CQS.

The Company’s proposed listing on the London Stock Exchange will provide investors with access to a differentiated convertible and credit-focused investment company which invests in a range of CQS-managed hedge funds. We believe a multi-fund approach is well suited for this type of investment and should complement the existing choice that investors have in the listed funds sector.

We believe our fundamentally-driven investment process positions us well to continue to take advantage of opportunities in credit and equity markets.”

CQS Diversified Fund Limited
The Company will be a closed-ended investment company incorporated in Guernsey. Application will be made for the Company’s Shares to be admitted to a Premium Listing on the Official List of the UK Listing Authority and to trading on the London Stock Exchange’s Main Market for listed securities (“Admission”).

The Company will have a wholly independent board of directors with extensive and relevant investment experience.

Investment Manager
The Company will be managed by CQS. Established in 1999, CQS is a US$8.2 billion investment manager running multiple alternative strategies and has approximately 200 people2. CQS has portfolio management and trading operations located in London, Hong Kong and New York with additional presence in the Channel Islands, Cayman Islands, Luxembourg, Geneva and Sydney.

Admission and commencement of dealings is expected in early December 2010. RBS Hoare Govett Limited has been appointed as sole sponsor, bookrunner and broker.

This announcement is an advertisement and not a prospectus. Investors should not purchase or subscribe for any transferable securities referred to in this announcement except on the basis of information in the prospectus to be published by the Company in connection with the admission of the shares in the capital of the Company to the Official List of the UK Listing Authority, by way of a Premium Listing, and to trading on the Main Market for listed securities of the London Stock Exchange plc. Copies of the Prospectus will, following publication, be available from the registered office of the Company.


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