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From Benedicte Gravrand, Geneva: An industry expert, whose focus is in the launching of financial services start-ups, gave Opalesque his perspective on yesterday’s Opalesque Special Report on hedge fund IPOs (Source).

When the manager itself floats, it doesn’t create permanent capital “There is a slight confusion among people between the difference between floating a hedge fund itself and a hedge fund manager. Most hedge fund managers are being priced at somewhere between 7% of assets to as high as 20% in some cases, whereas the fund itself is 100% of assets. I believe Third Point was floating a fund, not the manager… (Opalesque note: Third Point was the first U.S. hedge fund to list a single manager fund on the LSE – the Third Point Offshore Investors Ltd.)

When the manager itself floats, it doesn’t create permanent capital. They usually sell around 10% of the company. Consequently, if you are only floating 10% of the company and you are worth as much as 20% of assets, it is only really increasing your assets by 2%.

The flotation of a fund is permanent capital but it also has some trade-offs. Dan Loeb from Third Point lost 11% of NAV but was selling at 7% discount on top of it.

Closed-end funds always trade at discount If you can come into any open-ended fund and NAV and get......................

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