Thu, Nov 27, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Hedgebay calls on hedge fund managers to take advantage of secondary market platforms

Wednesday, September 05, 2012
Opalesque Industry Update - Hedgebay, the pioneer of the secondary hedge fund market, has called on hedge fund managers to take advantage of secondary market platforms, claiming that they can provide a permanent source of funding.

The call comes in the wake of a recent survey on the private placement industry by trading and risk solutions provider Simplify LLC. The survey, which polled around 500 private placement users, showed that 100% of respondents had traded hedge fund shares on a secondary basis – proving the popularity of secondary markets among hedge fund investors.

The survey claimed that private placements are set to double in 2013. However Hedgebay, who were shown to be the most popular broker with 42% of those polled having used their platform, claim that this statistic depends on manager uptake of the secondary market.

Since the credit crisis, volume on the hedge fund secondary market has surged, with many investors needing quick access to liquidity. That activity has seen the secondary market become a mainstream tool for the market. However, most managers have yet to use the secondary market on a consistent basis, thus potentially missing out on the best price for their shares as a result.

Jared Herman, Founder of Hedgebay, said:

“The majority of hedge fund managers have yet to embrace the potential of the secondary market, preferring to handle the private placement process themselves. As a result, they don’t have access to the range of price offers they could get from a platform, which means they are limiting the chances of getting maximum value from their shares. Volume on the secondary market has increased hugely since the financial crisis, but until managers start taking advantage of secondary trading it is difficult to see how the market will double within the next year.”

Moreover, Hedgebay believes that greater manager involvement would lead to further maturation of the secondary market. With broader and more liquid pricing options available, managers would be able to take advantage of a consistent source of funding, known as ‘permanent capital’. Permanent capital – the ability to protect against redemptions by having access to a constant source of capital – is much sought after among hedge fund managers.

A number of high profile managers have recently launched publicly listed reinsurance products, providing them with a stable pool of capital that can be invested over long term periods. Hedgebay believes that an evolved secondary market could perform a similar function for all hedge fund managers, giving them instant access to investors in the event of redemptions in their fund.

Jared continued:

“A source of permanent capital has long been the holy grail of hedge fund managers, but most don’t have the option of backing or launching a reinsurance vehicle, and even those that have had limited success so far. The secondary market gives managers access to a permanent source of funding, as well as creating a broader and more liquid for all investors, on the buy and sell sides.”

(press release)

Founded in 1999, the Nassau-based Hedgebay Trading Corporation through its authorised agents helps match sophisticated buyers and sellers of hedge fund interests and other illiquid alternative investment assets. Its international client base includes funds of hedge funds, ultra high net worth family offices, banks, pension funds, insurance companies, endowments, foundations and sovereign wealth funds. www.hedgebay.com

Bg

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Unlucky Paulson & Co. rebrands $1.6bn Recovery Fund after 13% drop[more]

    From Businessweek.com: A maturing U.S. economic recovery is prompting Paulson & Co. to change course. The $19 billion hedge fund firm, led by billionaire John Paulson, told investors on a conference call this month that the Paulson Recovery Fund will be renamed Paulson Special Situations Fund on Jan

  2. Opalesque Roundtable: Islamic Finance races ahead with Sukuk, the first managed account platform, and foreign demand[more]

    Komfie Manalo, Opalesque Asia: A number of developments took place within Islamic finance in the past years, including the launch of a Islamic managed account platform and the further growth of the sukuk space that saw this instrument evolve from being a type of an ABS security that was rarely

  3. CTAs , event-driven strategies lead hedge funds recovery in mid-November[more]

    Komfie Manalo, Opalesque Asia: November’s performance proves to be in sharp contrast to the previous month, with equities further consolidating their upswing last week, according to the latest Lyxor Asset Management’s Weekly Brief. CTA funds als

  4. Fund Profile - A complex hedge fund strategy works for United Technologies[more]

    From Institutionalinvestor.com: Reports that portable alpha is dead have been greatly exaggerated, as Mark Twain might have phrased it. Another Connecticut Yankee, giant United Technologies Corp., is gearing up to grow its successful, nearly decade-long portable-alpha program. The UTC strategy took

  5. Opalesque Exclusive: The unintended consequences of Basel III[more]

    Benedicte Gravrand, Opalesque Geneva: Bijesh Amin, co-founder and managing director of Indus Valley Partners (IVP), a technology solutions and services firm focused on the alternative asset management industry, has recently observed