November 29, 2004

Merger Creates Larger Fund of Funds Business for BNP and Fauchier

PARIS (HedgeWorld.com)--BNP Paribas Asset Management through its joint venture with Fauchier Partners plans to merge with Fauchier in order to grow a fund of funds business.

BNP Paribas said it would acquire a 50% economic interest in Fauchier Partners in consideration for contributing its shares in the BNP Paribas Fauchier Partners and additional cash payments.

According to officials, Fauchier will become one of Europe's largest dedicated managers of funds of hedge funds with US$3.5 billion in assets. The merger is pending regulatory approval.

Fauchier began working with BNP Paribas Asset Management in a joint venture in July 2001. The venture marked the first time that a major European bank took a stake in a stand-alone fund of funds (see ).

Patrick Fauchier, chief executive and co-founder of London-based Fauchier Partners, characterized the merger as a way to simplify the current "two company" structure. In a statement, he said, "We believe that the merged entity will be even better equipped to serve clients and be more attractive to professional talent we need to maintain our leading position in the industry."

Mr. Fauchier and Fauchier co-founder Christopher Fawcett, will continue in their respective roles of chief executive and chief investment officer. The firm's investment committee membership remains unchanged even as BNP Paribas Fauchier Partners' employees join the enlarged firm.

Overall, BNP Paribas Asset Management has US$197.3 billion in assets under management and advisement. The new fund of funds entity will manage portfolios for pension funds, financial institutions, corporations, charities, university endowments and family groups.

"Developing our alternative investment business is at the heart of BNP PAM's strategy," said Gilles Glicenstein, chief executive of BNP Paribas Asset Management, in a statement. "Our ambition is to be one of the European leaders in this field. To do this we found it was necessary to be allied with the best professionals; that is why we established an alliance with Fauchier Partners three years ago."

Included in the Fauchier team is the New York-based investment management group of ZCM Investor Capital, the U.S. arm of Zurich Financial Services that was acquired by BNP Paribas last April for US$650 million. That firm offered the Javelin Fund, which subsequently became a BNP Paribas Fauchier Partners fund of funds offering (see ).

BNP's dedication to hedge fund strategies has been difficult to ignore as the banking operation has done much work in the structured notes arena, most notably offering structured products tied to the Dow Jones Hedge Fund Indexes.

Contact Bob Keane with questions or comments at: bkeane@investmentadvisor.com.

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