Slowly but surely, India hedge funds are beginning to offer the kind of strategies that can attract big fish such as London hedge fund giant Man Group, whose fund of hedge funds business could make its first direct allocation to an Indian hedge fund within a year, according to Asia business head Patric Gysin. The entire Indian hedge fund universe is modest at around 50-60 funds. When that universe is boiled down to reveal those funds sophisticated enough to attract larger institutions and marquee fund of hedge funds (FoHF) investment from Europe or the US, it could more appropriately be described as a small planetary system – if one was feeling generous. The $15bn FoHF portfolio of London-based hedge fund giant Man Group, for example, is 10-15% exposed to emerging markets and 1% exposed to India. None of the latter exposure is achieved through direct investment into dedicated India-based hedge funds, but rather via the firm’s global emerging markets or pan-Asia funds, which then allocate a variable portion of their pot to Indian securities.   more »

Despite Dubai Financial Group calling off its plans to sell stake in the Bombay Stock Exchange (BSE), Toronto-based investment broker Thomas Caldwell and philanthropist George Kaiser have managed to acquire shares in Asia’s oldest bourse. Over the past few months, Kaiser has acquired over 3 per cent in BSE, while Caldwell has increased his shareholding from 3.8 per cent last year to 4.25 per cent through multiple private deals, exchange officials said. They said the shares had been purchased from brokers, as well as some of the institutional investors in BSE. Along with US hedge fund legend George Soros and private equity firm J C Flowers, Caldwell and Kaiser were in the race to buy Dubai Financial Group LLC’s four per cent stake in BSE. Kaiser, through his private equity firm, Argonaut, was the highest bidder and had offered to pay Rs 370 a share. But, looking at the rush, embattled Dubai Financial deferred its stake sale plans in anticipation of higher valuations in the future, said a deal maker.   more »

The US-based hedge fund Arcstone Capital LLC has made a passage to India by picking up close to 5% stake in the Kerala-based old generation private sector bank —Dhanlaxmi Bank. The fund has mopped up the shares in the bank through its investment vehicle Passage to India Master Fund Ltd. The Denver-based hedge fund has been scouring for value buys in India for the past couple of years. Aster Business Research Pvt Ltd is the sole advisor for the US-hedge fund in shaping its India strategy.   more »

Global business in Mauritius is active mainly in the area of investment in India, Africa and China. Mauritius is a leading provider of foreign direct investment in India due to favourable treatment under the double taxation agreement between the two countries. Since the signing of the agreement, many investment and hedge funds have been (and continue to be) incorporated in Mauritius for the specific purpose of investment in India. The benefits of including Mauritius in investment in the Indian market are unparalleled, whether by way of a collective investment scheme, a closed-end fund or other investment vehicle. Institutions, like individuals, are making more calculated decisions to maximize productivity and reduce risk and unqualified expenses. A more cautious period for hedge funds is thus envisaged, with international clients rethinking large-scale refinancing and extending timeframes for existing projects.   more »

According to separate amended Reg D filings with the U.S. Securities and Exchange Commission, two hedge funds managed by Bethesda-based Monsoon Capital have gathered $387.9 million total in pooled investment fund interests. Monsoon India Inflection Fund LP now has $163.1 million from 93 investors, while Monsoon India Inflection Fund 2 LP has $224.8 million from 167 investors.   more »

Hedge fund investors could be left out of pocket as managers conjure up shortcuts to earn once again the lucrative bonuses based on performance fees that were a feature of the industry before the credit crisis. Despite 20 percent returns last year, big losses in 2008 mean that between a half and two-thirds of hedge funds are below high-water marks -- performance levels they must hit before claiming a 20-percent fee on a fund's profits. This could persuade more managers to move to new firms where they can start earning these bumper fees straight away, forcing clients to decide whether the quality of the managers justifies the additional cost and disruption needed to follow them.   more »

Standard & Poor's, the world's leading index provider, announced today that it has licensed the National Stock Exchange of India (NSE), the largest stock exchange in India, to create and list Indian Rupee-denominated futures contracts on the S&P 500 (subject to regulatory approvals). The licensing agreement, jointly from S&P and S&P-licensee Chicago Mercantile Exchange to NSE, is part of a landmark cross-listing arrangement announced today by CME Group, the world's leading and most diverse derivatives marketplace, and NSE that covers benchmark indices for U.S. and Indian equities. The Rupee-denominated S&P 500 futures contracts will be made available on NSE via a sublicense from Standard & Poor's. Widely considered the single best gauge of the U.S. equity market since it launch in 1957, the S&P 500 is the world's most followed stock market index with nearly $1 trillion directly indexed and $3.51 trillion benchmarked to it.   more »

It seems, foreign institutional investors’ (FII) have to wait some more time to enter into currency futures markets in India. The Reserve Bank of India (RBI) is not in favor of foreign institutional investors’ entry into currency derivatives, even as the futures market for currencies and commodities segments continues to grow strongly. In a joint meeting of regulators comprising RBI officials and the Securities and Exchange Board of India (Sebi) recently, the RBI expressed unwillingness to allow FIIs into currency derivatives and commodities futures where even domestic institutional players are not allowed entry. Average daily volume of currency derivatives for the current month till last week was Rs 30,190 crore on the MCX Stock Exchange and National Stock Exchange (NSE). In April 2009, it was Rs 4,677 crore.   more »

Hedge fund strategies ended the first month of the year down 0.94 per cent as stocks pulled back amid fears about the global economy and the fiscal health of some Eurozone countries, according to the Lipper Hedge Fund Composite Index. Convertible arbitrage (-0.12 per cent) and credit focus (+0.27 per cent) led the performance league table for January. In contrast, other hedge (-2.67 per cent) and managed futures (-2.79 per cent) were the worst performing strategies. All equity-related strategies ended in negative territory in line with the global stock markets. Meanwhile, trend followers also posted losses, hammered by a correction in stocks and commodities.   more »

Hedge fund manager Orchard Capital Partners, which spun-off Stark Investments in 2009, said it has launched a new long/short fund on Thursday which it aims to grow to $500 million in two-three years. The fund, Orchard Gemini, which began trading in January is expected to open up to outside investors in April 2010. Orchard was formed in October 2009 after Teall Edds and Stuart Wilson who were running Stark's Asia investments quit the Milwaukee-based hedge fund taking the firm's Hong Kong and Singapore operations with them.This new long/short fund will look to invest across the region, most notably in Australia, South Korea, Hong Kong, Singapore, Japan, India, China, Taiwan and Indonesia, said Orchard Capital in a statement.   more »