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Macquarie Seeds Four Funds, Creates New Division

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SYDNEY (–Macquarie Bank Ltd., Australia’s largest investment bank, set up a new division to manage four hedge funds, each seeded with A$10 million (US$7.28 million), because its investors have been demanding absolute returns.

Cathy Kovacs, who has been with Macquarie for seven years, heads the new division, Macquarie Newton Specialist Funds Management Ltd., which is staffed largely with people who used to work at the bank’s proprietary equities desk.

Four funds are involved. Three were launched in October 2003: Macquarie Newton Special Events, Macquarie Newton Australian Absolute Return and Macquarie Newton Index Arbitrage. Ms Kovacs said that the special events fund engages in merger arbitrage, initial public offerings, buy-backs, placements and corporate structure arbitrage. It does not use corporate debt strategies, though, unless the debt is Australian Stock Exchange listed and converts to equity. The absolute return fund is long/short ASX equities. The index arbitrage fund looks for price differentials between the S&P ASX200 physical and the S&P ASX 200 share price index futures contract.

The fourth fund managed by the new department was launched in March aiming to provide an income stream. It’s the Macquarie Newton Buy Write Fund.