Singapore-based alternative fund manager 3 Degrees will launch a new credit fund that will invest in the performing debt obligations of Asian companies that are currently mispriced. The instruments used will include CBs, loans and bonds.
The fund's name is ADF Prime and the target size is $500 million, but the fund will launch with $25 million. It will not be leveraged. There are four different share classes, with management fees ranging from 0.5% to 1.5%, and performance fees ranging from 10% to 20%. The share classes will depend on size of investment.
The fund will focus on Asia-Pacific ex-Japan and it will be long-only, although there will be the ability to put on hedges. It aims for annual returns of 25%.
The fund will be managed by Moe Ibrahim himself, in tandem with his sidekick Jeff Tolk.
Ibrahim has noticed that in Asia, debt prices have fallen more than elsewhere. He reckons this is because of Asian investment banks unwinding their portfolios, global hedge funds closing their Asian operations, and capital being pulled from the region. He thinks this is unjustifiable as Asian credits are not only stronger than they were 10 years ago but are more sound than their equivalents in the US and Europe.
The fund's auditor will be Ernst & Young, the administrator and custodian will probably be HSBC and the prime broker is still to be determined.