Swedish hedge fund to invest in Bangladesh
Friday, 14 November 2008
FE Report
Brummer & Partners, a Swedish hedge fund manager, has chosen Bangladesh as a safer place for investment in the prevailing global financial downturn as it expects the region to ride out the global economic recession.
The largest Swedish hedge-fund manager, which manages about $6 billion money, set up the Frontier Fund in July to invest in Bangladesh stocks and private-equity investments, a New York-based online news service -- Bloomberg.com -- said Wednesday.
The company plans to grow the fund to about $500 million in the next five years, from $53 million, said the news service quoting Khalid Quadir, chief executive officer (CEO) of the firm's Dhaka unit in Bangladesh.
"I never believed in decoupling. Asia will be affected by the global turmoil," Patrik Brummer, founder of the Swedish firm, told the Bloomberg.com in an interview. "But when the dust settles at some stage, Asia will outperform the rest of the world in growing faster."
Bangladesh may join the ranks of the fastest-growing economies in the region as it benefits from its geographical proximity to India and China. The nation of 150 million people, equivalent to about half of the population of the U.S., offers a "huge untapped cheap labour force," Quadir said.
The labour cost in the South Asian nation is almost half of India's and less than a third of China's.
The firm also plans to start an Asia-focused long-short equity fund in the first half of next year once it finds the right team to manage it in Singapore, said Patrik Brummer as quoted by Bloomberg.com.
Long-short managers buy stocks they expect to raise and hedge those bets with short sales, or the selling of shares expected to drop. Such funds fell 22.8 per cent this year through October, according to Singapore-based data provider Eurekahedge.
"A lot of the hedge funds have a long-only bias, so they have difficulties in down markets," Mr. Brummer said. "Historically, we were able to make money for clients even in downturns and we will try to do that in the future."
Brummer & Partners Helios Fund, a portfolio of the firm's hedge funds, gained 5.7 per cent this year through October. The Futuris Fund, a European long-short equity portfolio, rose 26.2 per cent, the Bloomberg.com reported.
Hedge funds fell by an average 5.4 per cent last month, pushing the year-to-date drop to 15.5 per cent, according to the HFRI Fund Weighted Composite Index compiled by Chicago-based Hedge Fund Research Inc.
Brummer & Partners also made money for investors when the dot-com bubble burst at the start of this decade, the company's founder Mr. Brummer said.
The Stockholm-based fund manager, which set up Sweden's first hedge fund in 1996, is hoping to replicate that "first-mover advantage" in Bangladesh as competition for investment deals remains low, he said.
Brummer & Partners, a Swedish hedge fund manager, has chosen Bangladesh as a safer place for investment in the prevailing global financial downturn as it expects the region to ride out the global economic recession.
The largest Swedish hedge-fund manager, which manages about $6 billion money, set up the Frontier Fund in July to invest in Bangladesh stocks and private-equity investments, a New York-based online news service -- Bloomberg.com -- said Wednesday.
The company plans to grow the fund to about $500 million in the next five years, from $53 million, said the news service quoting Khalid Quadir, chief executive officer (CEO) of the firm's Dhaka unit in Bangladesh.
"I never believed in decoupling. Asia will be affected by the global turmoil," Patrik Brummer, founder of the Swedish firm, told the Bloomberg.com in an interview. "But when the dust settles at some stage, Asia will outperform the rest of the world in growing faster."
Bangladesh may join the ranks of the fastest-growing economies in the region as it benefits from its geographical proximity to India and China. The nation of 150 million people, equivalent to about half of the population of the U.S., offers a "huge untapped cheap labour force," Quadir said.
The labour cost in the South Asian nation is almost half of India's and less than a third of China's.
The firm also plans to start an Asia-focused long-short equity fund in the first half of next year once it finds the right team to manage it in Singapore, said Patrik Brummer as quoted by Bloomberg.com.
Long-short managers buy stocks they expect to raise and hedge those bets with short sales, or the selling of shares expected to drop. Such funds fell 22.8 per cent this year through October, according to Singapore-based data provider Eurekahedge.
"A lot of the hedge funds have a long-only bias, so they have difficulties in down markets," Mr. Brummer said. "Historically, we were able to make money for clients even in downturns and we will try to do that in the future."
Brummer & Partners Helios Fund, a portfolio of the firm's hedge funds, gained 5.7 per cent this year through October. The Futuris Fund, a European long-short equity portfolio, rose 26.2 per cent, the Bloomberg.com reported.
Hedge funds fell by an average 5.4 per cent last month, pushing the year-to-date drop to 15.5 per cent, according to the HFRI Fund Weighted Composite Index compiled by Chicago-based Hedge Fund Research Inc.
Brummer & Partners also made money for investors when the dot-com bubble burst at the start of this decade, the company's founder Mr. Brummer said.
The Stockholm-based fund manager, which set up Sweden's first hedge fund in 1996, is hoping to replicate that "first-mover advantage" in Bangladesh as competition for investment deals remains low, he said.