$140m unlisted fund planned

An Australian investor plans to launch a US$100 million ($140 million) global hedge fund on a local unlisted share market.

Stephen Matthews incorporated his Hedge Fund Patrol in New Zealand last October. Yesterday he quoted its shares on the internet trading platform Unlisted.

He said that NZ's more relaxed regulatory environment attracted him here and that the Unlisted market was the cheapest, least-demanding trading option.

The fund has one million shares on issue which it will offer to professional investors in this country.

The shares can't be offered to retail investors yet as the fund has no prospectus or investment status.

It initially hopes to raise just over $500,000.

Chapman Tripp partner Roger Wallis said funds are allowed to offer shares without having issued a prospectus in limited circumstances - in this case, where the investors' principal business is investing money.

Matthews said the money raised will fund a prospectus and marketing costs. Australians will get the chance to buy in the middle of the year and the fund will begin investing once $1 million in funds is raised.

Hedge funds can be a high risk investment and have drawn some criticism.

An Australian survey released this month showed investors there are likely to take on more risk this year as returns from the ASX and property investment decline.

Local fund manager Carmel Fisher - whose Fisher Funds Growth Fund was just named the country's top equity fund - voiced her concern at the time, saying that while NZ investors had been early adopters of higher-risk hedge funds, they should look to the good performance of local shares for a well-performing, lower risk investment.

Unlisted is not a registered securities exchange and is not subject to the disclosure, insider trading and oversight provisions of the Securities Act.

The internet share trader has come in for government scrutiny in recent weeks, with Commerce Minister Margaret Wilson saying it should be subject to the disclosure, insider trading and oversight provisions of the Securities Markets Act.

It would then have to register as an exchange.