ASIA FUND VIEW: Singapore Plans Hedge-Fund ... - Eurekahedge

ASIA FUND VIEW: Singapore Plans Hedge-Fund Listings
By Rita Raagas De Ramos
of Dow Jones Newswires
Wednesday March 15, 9:36 AM
Page 1 of 2
HONG KONG (Dow Jones)--Singapore's stock exchange is paving the way for the listing of hedge funds, the first
major push in Asia. Singapore Exchange Ltd. (S68.SG), or SGX, released a proposed framework for listing hedge
funds last week, and expects to finalize the details after gathering public feedback until March 28.
"With the expansion of the hedge-fund industry into a mainstream asset class and the increasing interest in
Asian investments as part of a core portfolio, the listing of hedge funds will provide the opportunity and
platform for the growth of this product in Singapore," an SGX spokeswoman said.
Indeed, hedge-fund assets grew to US$1.261 trillion globally in 2005 from an estimated US$254 billion in 2001,
according to research firm Eurekahedge Pte. Industry experts estimate that assets were a mere US$40 billion in
1990. Unlike traditional funds typically limited to a single asset class and a fixed investment strategy, hedge
funds can invest in any asset, anywhere in the world, utilizing investments and strategies with variable long and
short exposures and degrees of leverage.
Among the proposed listing requirements, SGX plans to allow listed hedge funds to offer units only to
institutions and accredited investors. The minimum asset size of a listed hedge fund should be S$20 million, or
about US$12 million, if denominated in the local currency, or US$20 million or its equivalent if denominated in
foreign currencies.
Listed hedge funds appeal to institutional investors and pension funds with strict mandates to invest only in
listed securities, or those looking for safer alternative investments even if they aren't bound by constraints.
"There is some comfort in the basic level of due diligence performed by a stock exchange on a listed hedge
fund," said Peter Douglas, council member for the Singapore chapter of the Alternative Investment
Management Association, or AIMA, a global hedge-funds organization.
Singapore would be competing against the well-established markets of Dublin and Luxembourg. Those
exchanges opened their doors to listing of investment funds in the late 1980s.
"I think Singapore is trying to widen the scope of their activities. Good luck to them, I think it's a good idea. But I
don't see any reason at the moment to list our funds in Singapore," said Philip Goldsmith, Dublin-based
managing director of New Star International Investment Products Ltd.
New Star has listed all nine of its hedge funds, with total assets of US$2 billion, in Dublin since its first one was
launched in 2001.
"It is more sensible for us to list in Dublin," Goldsmith said, citing New Star's familiarity with the listing process
there, the support extended by the Irish Stock Exchange, and the cost savings of having all the funds listed on
one exchange.
Around 4,000 investment funds are listed in Dublin, the majority of which are hedge funds, funds of hedge funds
and derivatives funds.
Source: http://sg.biz.yahoo.com/060315/15/3zdf7.html 15/03/2006

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"Most of the funds listing on the exchange are seeking a listing on a well-regulated and reputable stock
exchange. We have at present the largest listing of investment funds world-wide and we don't expect that
position of prominence to change," said a spokesman at the Irish Stock Exchange.
The ability of an exchange to serve as a major regulator of hedge funds is a key consideration in listing, according
to Stewart Aldcroft, regional director at hedge-funds distributor Noble Investments Hong Kong Ltd. "That is the
single most important" criterion to consider, Aldcroft said.
Dublin and Luxembourg are considered "quality regulators" and listing a hedge fund in either of those markets
tends to shorten the due-diligence period required by institutional investors before investing in such a portfolio,
Aldcroft said. *
New Star's Goldsmith said a Singapore listing would likely appeal more to startup Asian hedge funds.
"Hedge funds have used listing as a method of fund raising, with varied level of success. It certainly broadens the
reach to investors," said Kirby Daley, Tokyo-based vice president and strategist at Fimat Alternative Investment
Solutions.
Karl Hurst, managing director of Hong Kong-based hedge-fund firm HT Capital Management Ltd., which manages
around US$200 million in assets, doesn't feel the need to list.
"Listing requires yet more administrative work and additional expense," Hurst said.
Yet, it may be time for an Asian platform, some said.
"It's not about inflows, trading, turnover, or even fund raising. Right now, it's about having a third player for the
listing of hedge funds, especially in this time zone," said the AIMA's Douglas.
Choo Wai Hong, a Singapore-based partner at law firm Clifford Chance Wong Pte. Ltd., said it is time the global
hedge-fund industry moves from its Euro-centric approach and allows Dublin and Luxembourg to share the
stage with Asian markets, such as Singapore and perhaps later, Hong Kong.
Source: http://sg.biz.yahoo.com/060315/15/3zdf7.html 15/03/2006