Braced for the storm

Mon Mar 31, 2008

As more credit fallout looms, a fund's infrastructure could prove to make or break its business

By Carolyn Sargent

Over the past five years, pre-eminent hedge funds have expended much treasure ensuring the safety of their capital. Those investments now seem well placed, for the day of reckoning has come. As the credit bubble bursts, rippling through asset class after asset class, the stability of the framework put in place to support a hedge fund's business, especially financing agreements and risk management systems, could have the power to make or break a business.

In recent weeks, lack of liquidity has taken out a number of marquee funds - including Ron Beller's and Geoff Grant's Peloton Partners, Mark Fishman's Sailfish Capital Partners, and Carlyle Capital, a fixed-income group affiliated with private equity giant Carlyle Group. Many more funds are struggling with low liquidity levels, particularly single-strategy credit funds.

The hedge fund firms...

ISSN: 2151-1845 / CDC10004H

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