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By Benedicte Gravrand, Opalesque London:

Kevin Shames, director of a Johannesburg-based firm called Nexus Asset Management, talked to Opalesque about the hurdles that aspiring hedge fund managers face in South Africa (S.A.), and about the state of the industry.

The firm runs, among other things, a hedge fund hotel, which claims to provide hedge fund managers with fund creation services such as legal and compliance facilities, back-office, etc. – thus enabling managers to focus on investing. The hotel, which is about 18 months-old, currently has 8 funds managed by 6 managers.

Starting up a hedge fund in South Africa In S.A., the delay in starting up a hedge fund comes from the process of getting a licence, which can take between 6 and 18 months. Shames thinks that it “is certainly is an existing barrier to entry.”

The first thing to do is to apply for a normal licence, called an FSB Category II licence, so that the manager can manage assets on a daily basis. Once the manager has that licence, he or she has to apply for the Category IIA licence, so as to be able to manage a hedge fund. This lengthy process can be fairly difficult to go through if the manager is already working somewhere.

Shames stressed that it is not easy to be a new entrants in the S.A. hedge fund industry, now or in the near future: “One thing that is of little doubt is that there will be i......................

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