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UCITS III platform provider Merchant Capital announces launch of first European L/S equity fund

Wednesday, March 03, 2010
Opalesque Industry Update - Merchant Capital, the leading UCITS III platform provider to the global hedge fund industry, has today announced that its first client is now fully operational. Robert Maxwell of Tressis SV (“Tressis”) will act as investment adviser to the fund, named the Merchant European Equity Fund, while Merchant Capital (“Merchant”) is the fund’s investment manager. Tressis - Spain's leading independent distributor of investment funds, structured products, fixed income and other financial products - is also the distributor of the fund.

The fund’s strategy is primarily equity long/short based on a universe of 600 stocks, with characteristics of an equity market-neutral strategy. The initial structure of the Merchant European Equity Fund will be based on twenty long and twenty short positions, which are re-balanced on a monthly basis. Typical gross exposure will not rise above 180% and in compliance with UCITS III regulations, the fund has a hard limit of 200% gross exposure. Net exposure will be kept within a range of +/- 20% at all times.

Merchant’s UCITS III umbrella structure allows asset managers to launch UCITS-compliant investment vehicles, typically hedge funds. Managers who use the Merchant platform are free to brand their products as they prefer to best reflect the style and investment philosophy of their fund.

The fund is fully UCITS III compliant and offers investors weekly net asset valuations (NAVs). The fund is initially targeting High Net Worth Individuals and institutional investors across Europe, with plans to also reach family offices in Europe and North America.

Before founding the Merchant European Equities Fund, Robert Maxwell was Managing Director at Liberty Square Asset Management, a position he took up in 2006. Prior to Liberty he was at Neutralis Asset Management and RAB Capital plc. Before moving to the buy-side, Robert was a founding partner of Maxwell Espinosa AV SA and Global Head of European Equity Products for Paribas.

George Cadbury, Director of Merchant Capital, said:

“Tressis’ fund is an excellent example of how we wish to facilitate innovative investment managers with the essential operational and regulatory support to bring their investment ideas quickly to market. We are now in advanced discussions with a number of other fund management companies looking seriously at how they can use us to launch UCITS funds this year.”

Commenting on the launch of the fund, Robert Maxwell of Tressis SV, added:

“We believe that a fund of this type within the UCITS structure provided by Merchant Capital will be very well received by investors looking for consistent returns with low volatility.”

PNC Global Investment Services (Dublin) provides the fund’s fund administration services, and PNC International Bank (Dublin) is the custodial and trustee services provider. Carne Global Financial Services provides independent corporate governance to the fund while Merchant uses Kinetic Partners for risk management and valuation.

About Merchant Capital’s UCITS III Platform
Merchant Capital has built a UCITS III umbrella structure domiciled in Dublin. Coupled with the extensive experience of its management team, clients are supported by some of the industry’s leading service providers whilst being provided with a cost-effective entrée to the UCITS market. Merchant has extensive structuring, investment management and systems expertise.

As investment manager of the UCITS III Umbrella, Merchant will appoint the client as adviser or sub-manager of a sub-fund (“Cell”). This Cell will be managed according to the client’s instructions whilst Merchant manages the oversight, administrative, processing and regulatory functions. Independent trustees are appointed: a UCITS requirement and also a due diligence prerequisite for many investors.

Launching a UCITS III product independently can be an expensive, labour-intensive endeavour. Merchant Capital provides an efficient, cost-effective entry into this new breed of hedge fund.


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