Regulation win for hedge funds over banks

Regulation win for hedge funds over banks

Hedge funds are likely to be the winners from new rules that will drive business away from established investment banks towards businesses not covered by the regulations, according to theTelegraph. Non-banks, which include hedge funds, private equity firms and pension funds, are likely to pick up an increasing share of financing services once provided exclusively by the big banks. The forecast comes in a report by US investment bank Morgan Stanley and consultancyOliver Wyman, which predicts tough times ahead for the City.

Wealthy investors are showing a healthy appetite these days for newly minted hedge fund managers, judging by the activity in oneBlackstone Group managed portfolio, saysReuters. In about four months, hundreds of individual investors sank some $355m into a so-called hedge fund seeder set up by the New York-based investment firm, a recent regulatory filing shows. Overall, Blackstone's Strategic Alliance fund has raised $2.4bn, say people familiar with the fund.

Chicago-basedNorthern Trust has agreed to buy hedge fund manager Citadel's fund administration business,Omnium, a person familiar with the situation said Thursday, theWall Street Journal reports. The value of the deal was not known. Both Northern Trust and Citadel declined to comment. The acquisition is part of the consolidation of the fund administration industry, as hedge funds increasingly turn to institutional investors for capital.

Some of the world's largest hedge funds and private equity groups have held talks with Spain's troubled savings banks as they rush to secure 15bn ($21.3bn) in new capital to avoid a state bail-out, reveals theFT. Funds includingPaulson & Co and the buy-out groupsCerberus andApax have held meetings in recent months with several Spanish savings banks to discuss possible investment. "At the moment, Spain is crawling with hedge fund and private equity people," said a senior executive at a large savings bank, which are known as cajas.

Investors are still pouring money into China-focused hedge funds despite laggard performance amid a tightening economic environment, says the Wall Street Journal. According to reports, China funds added $3.5bn in assets in 2010 to a total $18.68bn, even as their 6.11% gains were short of the global industry average of 10.55%. "The country's equity markets have reacted negatively as the Chinese government's concerns about inflation become clear, evidenced by recent increases in interest rates, reduced growth forecasts in its 5-year plan and an increase in reserve requirements in January," it said.

A Connecticut hedge fund and its manager were sued by theSecurities and Exchange Commission for disgorgement of gains made while sending hundreds of millions of investors' dollars to fraud scheme operatorThomas Petters, reportsBloomberg. The SEC complaint was filed today against Marlon Quan and his Greenwich, Connecticut-basedAcorn Capital Group. The complaint also names as a defendant Stewardship Investment Advisors, another firm controlled by Quan.

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