Three alumni of Goldman Sachs, Lehman Brothers and GLG Partners, launched this week a "hedge fund", providing, draws the lessons of the mishaps that investors have known during the crisis of the past two years when they found themselves prisoners of funds they could not get out. Northlight, the funds in question, to be invested on the credit of European companies "high yield" (high performance, and therefore risked). This class of assets may take advantage of the fragmentation of the banks, which must limit their loan portfolio. The Fund starts with 50 million euros to invest and aims to end a size of 300 to 500 million.
One of the main aspects put forward for this Fund is the monthly publication by one-third of the value of the net assets of the fund divided into three price: the value of sale of the shares of the Fund (in English "IDB"), the purchase ("offer") and the average price between the two ("mid"). The evolution of the gap between the price of purchase and sale will help communicate the liquidity of the underlying assets, and therefore the ease of exit of investors (the gap, more liquidity is potentially low).
Avoid running toward the exit
In addition, investors will be invited to sell their share in the "bid" price and to enter price "offer", instead of the "mid" generally imposed price for the two transactions in this industry. The goal is to align the interests of investors incoming and outgoing so there is no race to the output when the markets are nervous. Similarly, Northlight chose to give the opportunity for carriers of out with a month's notice, or within relatively short for this type of Fund.
Based in the Cayman Islands, North-light is also not controlled by a Board composed of professional administrators based there. "Our three directors are finance professionals who have a reputation to defend and are not business administrators who are at the round table of dozens of funds", puts forward Charles - Henri Lorthioir, one of the founders of the "hedge fund". At the same time, the head of the risk, derivatives, Goldman Sachs former specialist, depends on the Council and not managers, to avoid conflicts of interest.
Finally, Northlight breaks with the rule of 2-20 which prevails despite the crisis in the industry and will charge 1.5 of management board plus 15 of the performance of the Fund. Half of the performance of managers is also reinvested alongside each investor individually and is affected by managers when the investor in question out of the bottom.
It remains now to test the suitability of the structure of Northlight in chahutés markets. And the stability of its model in time. "In General, more funds were successful, more they restrict the liquidity of the investors, which makes sense considering that the funds may have limited output during the crisis are those who survived," said a manager of "hedge fund". One thing is certain, however, institutional investors will ask more protection and transparency "hedge funds" transitioning. "We are proud to have met Bedrock RealTime SA, Citco and KPMG to do the work of structuring innovative," says Cyril Armleder, another founder of Northlight.
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