Swiss manager backs London with dual listing
A Swiss asset manager has shown confidence in London as a financial centre by revealing plans to list its flagship fund of hedge funds in the UK capital, despite some of the largest funds on the London Stock Exchange being forced to offer investors votes on their future amid falling share prices.
LGT Capital Partners will dual list its $546m (€393m) Castle Alternative Invest fund in London on June 5. The fund already has shares trading in Zurich.
The move will not involve any fundraising, according to Edward Cartwright, head of listed company business development at LGT, which manages about $5bn in funds of hedge funds, and $12bn in funds of private equity funds.
Cartwright said he hoped the dual-listing would increase liquidity in Castle's shares. There is only one market maker in Switzerland for shares of funds listed there, he said. This is LGT Bank, LGT Capital Partners' parent company.
He added that Castle could have up to five market makers in London, generating greater interest, and liquidity, in its shares. Greater investor demand could narrow the discount of Castle's share price to its portfolio's net asset value, which has averaged 31.3% over the past 12 months, according to Royal Bank of Scotland
At 12:30 GMT today, the gap was 32.6%, according to Bloomberg.
Castle's investments fell 14.6% in value last year, against funds of hedge funds' 21% fall, according to analysts Hedge Fund Research. However, poor liquidity in the secondary market for Castle's shares saw them trade at discounts to NAV as wide as 50%, RBS said.
Thomas Weber, partner at LGT Capital Partners, said dual listing Castle should also broaden its UK investor base. Its shareholders are mainly located in German-speaking nations.
Wide discounts among three of London's listed funds of funds have triggered shareholder ballots on their future in recent months.
Shareholders in Dexion's Absolute fund, the sector's largest, backed continuing the fund last month, as did those in Goldman Sachs' Dynamic Opportunities fund a fortnight later.
Most shareholders in Dexion's Alpha Strategies fund voted against going on this month, however Dexion is understood to be preparing restructuring proposals to sway investors against leaving.
Cartwright said Castle did not face a shareholder vote on its own future, and mechanisms to control discounts to NAV were written into the prospectus for Castle's London listing.
--write to dwalker@efinancialnews.com
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