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Australian Fund Lists Fund of Funds on Local Stock Exchange

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SYDNEY (–Pengana Capital Ltd. is making its strategy available on the Australian Stock Exchange, expecting to gather up to US$100 million to invest in boutique hedge fund managers.

The new Pengana Managers Ltd. fund will be listed on the Australian Stock Exchange, where investors will be able to buy a share in the fund and an equity stake in the underlying fund management companies in a separate vehicle, the Pengana Managers Trust.

The equity stakes in the firms will range from 18% to 30% and will allow investors the opportunity to participate in the capital growth of the managers themselves, according to Pengana officials. They are billing the new securities offering as a “new concept in Australian financial services.”

The offering is scheduled to begin on April 13 and begin trading on June 16. Pengana is charging investors a fee of 1% of net asset value. The NAV will not include the equity stakes the fund takes in the underlying managers, though.

“This new structure allows investors not only to benefit from the hedge funds’ performance, but potentially to enjoy enhanced returns as the businesses of the boutique managers grow over time,” said Malcolm Turnbull, co-founder and chairman of Pengana, in a statement.

Pengana seeks to be a pioneering force in the Australian hedge fund community, which is growing in assets as retirement funds and other institutions start to take notice of alternative investments. Officials launched their hedge fund incubation strategy last year (see ).

In the last month, officials also teamed up with HFR Asset Management, Chicago, to offer investable index products to Australian and New Zealand investors (see ).

Damien Hatfield, Pengana’s head of hedge funds, also is the chairman of Australia’s chapter of the Alternative Investment Management Association. He is handling the selection of the emerging managers to be included in the listed portfolio.

So far, he has chosen four fund managers and will be allowed to add up to four more, per PML guidelines, over the next six months. The firms included in the initial offering are: Cape Leeuwin Capital, an Australian long/short equity manager; Stanley Fund Managers, international long/short equities/market neutral; Camelot Managers, global macro; and Percon Capital, managed futures.

All of the Sydney-based firms were started in the last year, with Cape Leeuwin and Stanley Fund Managers launching in 2004.

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