News > Financial Services

Can Australia's visa program attract China's angels?
Venture Capital
<p>Australian start-ups have long suffered from a dearth of venture capital funding, thanks to the gaping hole left by local superannuation funds withdrawing from the asset class in recent years. But now the country has revamped its Significant Investor Visa (SIV) program, there is hope more wealthy Chinese will park their cash into Australian startups. </p> <p>The Australian Financial Review (AFR) reports that Chinese investors, spooked by economic volatility back home, are lapping it up so far. In the first three months since the program relaunched, investors have put in 70 SIV applications worth $350 million of investment in the past three months. </p> <p>VC don’t get all that money but Chinese investors must put at least 10% of their minimum 5 million Australian dollars ($3.5 million) into VC, while 30% needs to go into small listed companies. Its an improvement on the last visa program which was launched in 2012 but then suspended by April, 2014 because of abuse. Most of the money was going  into low risk assets. </p> <p>So far their is only about $24.7 million potentially available to startups through the scheme. Not a lot but it’s a strong start. Andrew Martin, managing director, at Moelis, which is managing some of these new investments, told AFR:  <br /> "The old scheme was producing around 50 visas a month [$3 billion in annual investment] and we believe it will get back up to that level over time."<br /> Wishful thinking? Perhaps, but the government is not only one betting on China's appetite for Australia. Sapien Ventures, set up in July, is looking to get a slice of a the pie by raising 50 million australian dollars from this the predicted Chinese angel influx.<br /> Photo: Paul Bica</p>
Another Valeant casualty
Hedge Funds
Nehal Chopra’s Tiger Ratan Capital Fund is another high-flying hedge fund whose performance has been devastated by the fallout from allegations about dodgy practices at Valeant Pharmaceuticals. It lost about 33% during the past three months, erasing her gains for 2015, according to investor documents and people familiar with the matter, reports The Wall Street Journal. It shows just how fickle fortune is in
Swiss-Asia launches 5 new funds
Asset Management
<p>2015 continues to be a banner year for Swiss-Asia, not only did it win HFM Week’s 2015 fund platform award, but the incubator has also launched five new funds in the third quarter, according to Opalesque:<br /> “Swiss Asia Managing Partner Steve Knabl said that the S$2.5bn ($1.78bn) platform had signed five new fund managers that have launched in Q3-2015.</p> <p>The fund management platform continues to see strong interest in its hedge fund incubator model, said Steve Knabl. Swiss-Asia is also providing options for fund managers in the $3-7m that can be extremely cost effective and offer all the flexibility that a Cayman Fund does.</p> <p>Head of Business Development Omar Taheri told Opalesque, ‘The new fund managers are seeing the merit in joining a platform as they can focus on their trading, the continued interest has seen exponential growth and we invite all service providers to work together with us in developing our model.’”<br /> Among the five new funds are Sea Capital, a long-short equity, energy and shipping fund managed by Per Didrik Leivdal, AlgoTrend, a Hong Kong-based algo and momentum-driven fund headed by Julien Moisson, and TGCC, a futures and options player run by KK Chua and Sze Meng Tan.</p> <p>The new launches should bump Swiss-Asia’s AUM and roster up a notch. As we’ve previously reported, the Singapore-based platform added 17 funds earlier this year, a huge jump from the 16 it had in 2014, and was expecting its assets under management to surge by at least $700 million. How much the new funds brought in however was not divulged.<br /> Photo: manhhai</p>
Healthcare hedge fund calls Valeant pricing 'outrageous' while recommending Horizon
Hedge Funds
<p>At this moment, there are significant investing opportunities in healthcare, Jim Flynn of Deerfield Partners said at the Invest for Kids Conference in Chicago Wednesday. Yet Valeant Pharmaceuticals is not one of them, he emphatically asserted as he outlined a potential relative value trade when he recommended a long investment in Horizon Pharmaceuticals.</p> <p>Chart via S&amp;P CapIQ<br /> Flynn: Valeant pushes financial structuring to its limit and pricing issues are more a statement on individual companies than pharma industry as a whole<br /> Deerfield Partners is a well-regarded healthcare specialty hedge fund that has delivered to investors 38 times their original investment since their founding in 1994. Flynn, the current managing director of the New York-based fund, surveys today’s specialty pharmaceutical investment environment that has been devastated by scandals at Valeant and Turing Pharmaceuticals, connects dots to pharma’s history with the U.S. government and doesn’t see a pretty picture ahead.</p> <p>The issue that investors should not focus on, however, is the issue that is currently top of the news.  Flynn said the pharmacy distribution issues that is currently at the center of the Valeant scandal is not the ball investors should focus on. “Don’t spend too much time on how product is distributed but more to the point drug pricing,” Flynn explained, saying leverage and sustainability were the real issues that are not much discussed. Valeant is a one off, an industry bad boy that “pushes some of its financial structure to its absolute limit.Philidor is more a statement on that firm’s internal controls than industry in general,” he said.<br /> Flynn: Drug pricing issue is “outrageous” and won’t go away unless specific companies change their pricing policies<br /> What is material to the entire healthcare industry is price gouging. Flynn anticipates if practices don’t change, pricing along with tax haven issues will be dealt with severely by government, staring with Congressional hearings over the next month, along with tax haven issues. “This is not going away” as a political issue, he said.</p> <p>To understand the significance of today’s health care issue and forthcoming government scrutiny is to look back in history to last time the pharmaceutical industry came under intense political pressure. The year was 1993 and Congress was livid, led by Sen David Pryor (D-AK), as drug prices had risen by 15 to 20 percent. This led to Congressional pressure and ultimately an agreement from the pharma concerns that they would limit price increases in line with general inflation, Flynn stated, which at the time was considered beneficial to the pharma industry.<br /> Flynn points to the key argument that swayed regulators is one that rings hallow today. In 1993 the argument that higher drug prices were required to fuel research and development ultimately won the day for pharma. Flynn notes that given the current situation, where drug roll-up companies raise prices to improve profits and slash research and development, he expects Congress to take tough action. He notes that Valeant raised drug prices on 85 drugs by 24 percent on average in the last year while spending much less than average companies on drug development and almost nothing on drug discovery. Led by firms such as Valeant and Turing Pharmaceuticals, who raised prices by 5,000 percent on a lifesaving drug, Flynn calls the current drug price increases “historic and outrageous,” not in line with the drug manufactures 1993 pledge to keep price increases in line with inflation.<br /> Drug companies moving tax authority off shore is a double edged sword that will also be dealt with, he anticipates. Raising drug prices increases the costs for Medicare and Medicaid while offshoring profits takes away government revenue to fund these programs. In the end the math doesn’t work and something will have to give, Flynn.<br /> Flynn: Valeant has patent and leverage issues and is paying down outstanding debt is only one potential path, many of which are negative<br />
Total value of assets managed by the top 20 split by manager domicile
Asset Management
<p>&nbsp;</p> <p>This originally appeared on ValueWalk. </p>
JPMorgan’s Kolanovic: Another Flash Crash Possible
Hedge Funds
<p>The derivatives research team at JPMorgan that forecast the August market sell off based on algorithmic positioning and then, again based on a reversion of systematic positioning, predicted on September 24 the subsequent market rally in October, has yet another interesting market call.</p> <p>Kolanovic<br /> Kolanovic: CTA signals could change based on relatively small market moves as “risk of another technically driven flash crash” is upon us<br /> “Near term the market is likely more resilient to the risk of another technically driven flash crash,” the November 5 report predicted, citing technical flows from option hedges, volatility targeting, managed futures CTA and Risk Parity funds.</p> <p>“We believe that these strategies (from option hedges, volatility targeting, managed futures CTA and Risk Parity funds) largely re-levered to pre August crash levels,” which was “a significant driver of the S&amp;P 500 performance in October” and is now posing downside risk today, a November 5 research report from JPMorgan’s celebrated derivatives research team of Marko Kolanovic and Bram Kaplan says.</p> <p>“Given the tight trading range over the past year, CTA signals have risk of changing on relatively small market moves (i.e. there is elevated ‘CTA gamma’). On the other hand, given the lack of a large put option gamma imbalance, and perhaps some residual buying from VT funds, near term the market is likely more resilient to the risk of another technically driven flash crash.”</p> <p>Kolanovic<br /> Volatility targeting and risk parity strategies have re-loaded</p> <p>Considering the sharp decline in realized volatility, the report notes strategies that target constant volatility were required to re-lever their portfolios. While volatility targeting strategies may be buying on the way up, the report forecast that “realized volatility is unlikely to drift much lower (e.g. to the summer lows), so any residual buying from (volatility targeting) strategies may not be sufficient to push the market much higher.”</p> <p>The report noted that nearly $300 billion is trading in volatility targeting, targeting a range from 8 to 9 percent. Risk parity strategies are significantly larger, with $500 billion used to influence markets, but the strategies can vary significantly. “Risk Parity strategies employed by Hedge Funds may be substantially different from those employed by e.g. Pension funds (using risk parity in house as a longer term asset allocation method).” To account for this challenge JPMorgan uses different models for hedge funds, accounting for nearly $150 billion in risk parity assets, and pension funds, which account for nearly $350 billion. These funds de-levered in August and September, but re-levered in October to finish at their pre-crash equity allocations.</p> <p>In other words, the gun is cocked and ready to fire.</p> <p>This article was originally published by ValueWalk. <br /> Photo: Artondra Hall </p>
Elite startup club names top UK tech companies
Venture Capital
Silicon Roundabout doesn't sound quite as sexy as Silicon Valley, but it's looking to compete with the California tech space. Silicon Valley Comes to the U.K. (SVC2UK) has chosen 58 new startups they think have potential to hit revenue of 100 million pounds in the next three to five years, writes Business Insider. The 58 companies added to the "Scale Up
Maybe it's not so hip to be Square
Venture Capital
Square announced Friday that it will price its upcoming IPO at $11 to $13 a share, making a valuation of about $4.2 billion. Square was most recently valued at $6 billion, so where's the beef? Square is erring on the side of caution as it has watched other tech companies fall short with their own IPOs, reports Wired. At the
Aberdeen CEO stands strong as firm shakes
Asset Management
<p>Aberdeen Asset Management co-founder Martin Gilbert withstood a 97% fall in share price 13 years ago amid scandal. Now Gilbert is on shaky ground again as Aberdeen gets pummeled by emerging market performance and outflows. Rumors are swirling that Gilbert is looking to sell his Scottish firm, but Aberdeen denies the claims and the fact that the company could be in trouble, reports the Financial Times.<br /> Mr. Gilbert’s opinion on this is clear: “Everyone is talking about Aberdeen like we are in some sort of crisis. Of course we’re not, we’re a business with £300bn of assets under management and more than £550m in net cash.”<br /> Aberdeen has made more than 40 acquisitions, including the massive purchase of the Scottish Widows Investment Partnership in 2014, in attempts to expand the business. But the firm has undeniably been bleeding assets for the last two years. Gilbert is putting up a strong front, and has certainly survived turmoil in the past, but is it time for him to step aside? With SWIP and other businesses now under Aberdeen, the firm could start to turn away from the emerging markets that are dragging it down. Perhaps it's time for Gilbert to let someone else take the reins during this transition.<br /> Photo: Aberdeen</p>
People Moves: Allianz hires UK institutional sales head; Pimco loses head of product management
Asset Management
<p>Allianz hires U.K. institutional sales lead. Tim Bird has joined Allianz Global Investors as director of the U.K. institutional sales and client servicing team, a new role for the firm. Bird comes to the firm from T. Rowe Price, where he worked as head of the U.K. and Irish institutional business. That role is now being filled by Andrew Skeat.  Pensions &amp; Investments</p> <p>Pimco head of product management to retire. Wendy Cupps will leave Pimco at the end of the year, after 21 years working for the California firm. Jennifer Bridwell, head of Pimco's alternative products, will replace Cupps. Cupps has been involved in the executive level turmoil at Pimco since founder Bill Gross's departure last fall, but says the firm's upheaval has nothing to do with the timing of her retirement. Reuters</p> <p>Legal &amp; General grows U.S. index team. Legal &amp; General Investment Management America has hired Greg Behar as head of index investment strategy, a newly created position for the firm. Behar joins from Northern Trust Global Investments, where he served as senior v.p. for global equity.</p> <p>Invesco Perpetual CEO to step down. Mark Armour is leaving the U.K. firm less than two years after becoming CEO. Armour will be replaced by Andrew Schlossberg, currently head of U.S. retail distribution and global ETFs at parent company Invesco. Gulf News</p> <p>&nbsp;<br /> Photo:  ©iStock.com/ooyoo<br /> &nbsp;</p> <p>&nbsp;</p>