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Man Group, slated to become the first firm to list a hedge fund on the New York Stock Exchange this northern autumn, will delay the public offering as market conditions have deteriorated dramatically, a source familiar with the company's plans said yesterday.
The London-based company - the world's
largest publicly traded hedge fund group with more than US$60 billion in investments - told US financial regulators in May that it wanted to list the Man Dual Absolute Return Fund in New York in September.
Man's IPO would have marked a milestone for a British company that has never before raised money in the US capital markets through a public offering, but has dealt with wealthy Americans for years.
Man's plans would have given less affluent American investors, for whom hedge funds' US$1 million minimums are too expensive, another way to access the once red-hot asset class.
At the end of May, when the average hedge fund returned 2.38 per cent and demand for hedge funds among average investors surged, an IPO seemed to be a very good idea. Man planned to let investors put in as little as US$2000 - or US$20 a share for a minimum of 100.
However, the outlook changed dramatically this summer with many different types of hedge funds, not just the ones concentrating on fixed income plays, reporting heavy losses.
Tykhe Capital, a 5-year-old New York-based fund company that manages roughly US$1.8 billion, has seen its portfolio value plunge about 20 per cent in August after one of its portfolios lost 7.9 per cent in July and the other slipped 4 per cent, according to an investor briefed on the matter.
Tykhe Capital did not returns calls seeking comment.
The fund's four principals use computer models to buy and sell US stocks short. Tykhe was expected to invest as much as 85 per cent of the of the hedge fund's assets, according to documents filed with the US Securities and Exchange Commission.
Last month Sowood Capital lost 57 per cent and was forced to close down.
Industry analysts warned that even though industry performance numbers showed a slight gain in July, heavy losses might be lurking at funds that have not yet reported their results.
They also said market conditions could worsen this month, making it even more treacherous for hedge fund managers, like Tykhe, who often use leverage, or borrowed money, to try and boost returns.
- Reuters