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Capital Markets

Funds seek long-term capital for management

For the funds, there are lots of advantages: diversification of funding sources; the ability to invest in less-liquid opportunities; and the power to raise more AUM. But do investors understand what they are buying? Helen Avery reports.

HEDGE FUND MANAGERS are increasingly looking to the public markets as a source of long-term capital. Citadel Investment Group, a $12 billion Chicago-based hedge fund, sold $500 million of five-year notes in December off its public MTN programme. Alternatives house Fortress Investment Group, which manages $9.4 billion in hedge funds, floated an 8.6% stake in the management company on the New York Stock Exchange in February, raising about $685 million. And hedge fund manager Brevan Howard, which has more than $11 billion in hedge fund assets, raised €770 million when it floated a single-strategy fund on the London Stock Exchange in March.

The three different methods of raising capital via the public markets have drawn comments from all corners of the financial industry.

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