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The new fund follows on from the firm's first product, the $400 million Ginger Fund, a long/short equity Greater China fund that is focused on Chinese equities primarily in Hong Kong, Shanghai and Taiwan. That fund has been in existence for four years and returned 37.5% in 2007. The new fund is a long-biased product with 80% of its holdings held longer term at 12 to 18 months.
The new fund has a different strategy. The reasoning behind it was that as a result of ChinaÆs growing global economic influence, there will increasingly be knock-on catalytic effects on non-China stocks. For example, non-Chinese companies that may benefit from winning significant China-sourced supply orders or be party to cross-border M&A activities. The new fund will look to invest in these global stocks. In that sense, it employs some kind of a China event-driven strategy expressed through long/short equity.
Anticipated net exposure in the new fund is 30-70%. A shorting event could be, say, the news of a supply relationship starting to break down between the foreign company and a big Chinese purchaser.
The new fund will only invest in stocks that have a market capitalisation of over $600 million. There will be a restriction of a maximum of 20% in one sector theme or a maximum of 10% in any one stock.
Management fees will be 2% and performance fees will be 20%. The fund launches with $20-$30 million and has a target size of $500 million; it has a target return of 20%+.
Fund of fund investors are showing the greatest interest so far in the new fund. In the original fund, the investor profile is led by family offices.
Service providers for the new fund are Morgan Stanley as prime broker and HSBC as administrator.
Ginger Capital now has 17 employees in offices in Hong Kong, Shanghai and Beijing. It was founded by YanPing Xu who used to run private wealth portfolios at Goldman Sachs along with her former colleagues Dinnie Li and Vienna Lau. YanPing Xu and Yvonne Sin co-managed Ginger Fund in the last two years.
With the launch of Ginger Opportunity Fund, Xu will take a lead on the existing Ginger Fund, and Sin will take the lead on the Ginger Opportunity Fund. Sin had 12 years of experience in investment banking and equities with Morgan Stanley in New York and DLJ in Hong Kong before joining Ginger.
The Ginger funds are not named after the spice. It comes from the Chinese word ægin jieÆ, which coincidentally means æmake moneyÆ.
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