China International Capital Corporation (CICC) is teaming up with UK hedge fund manager Sloane Robinson for a Greater China long/short equity fund.
It will expand the China bank's hedge fund range while providing Sloane Robinson, which has $3.7 billion in assets, with an inroad to the mainland’s lucrative hedge fund market.
The partnership will see CICC’s wholly owned Hong Kong asset management subsidiary jointly develop, manage and distribute the as-yet-unnamed fund with Sloane Robinson. CICC is to provide research resources to the vehicle, while the UK firm will lend its investment management experience.
CICC is a relative newcomer to the hedge fund space. Its two offshore equity long/short hedge funds, China Fund Segregated Portfolio and Asia Fund Segregated Portfolio, were launched in 2006 and 2008 respectively.
By comparison, Sloane Robinson has been in the industry for nearly two decades, and runs a number of Asia and emerging markets-focused strategies. They include a Ucits-compliant pan-Asia vehicle. However, deeper China expertise would appear to be a welcome addition to the firm, whose Global Fund reportedly lost between 17.3% and 24.3% in 2011, partly due to “a rosier view of China than has been warranted”, according to a year-end letter to clients.
Very few details of the planned joint fund have been disclosed, with CICC declining to comment on the targeted size, management team and launch date. It is likely to be run out of Hong Kong, where CICC’s two existing hedge funds are managed, and where its asset management unit has a licence under the city’s Securities and Futures Commission.
The partnership follows news that China plans to allow foreign hedge funds to register and raise renminbi funds on the mainland, with a forecast initial quota of $5 billion.