With the backdrop of widespread market turmoil, it looks a brave move. Just as the Times was reporting that nearly $38bn of planned US floats are hanging in the balance, AQR, one of the world’s largest hedge funds, is looking to raise $500m in an IPO.
The FT reports that AQR plans to sell about 10 per cent of the firm in a listing, valuing it at $5bn. Scheduled for today, an SEC filing might yet fail to materialise, the story adds.
Hedge funds should be less vulnerable in deteriorating market conditions than their private equity peers. The return of volatility should offer as much in the way of opportunities as it does challenges. The private equity groups, in particular the purer private equity players such as KKR, which is also eyeing a float, are more reliant on the debt markets to drive buyouts and a buoyant equity market in order to exit their investments.
Shares in Blackstone – which with real estate interests, hedge fund of funds and its advisory business is more diversified than some of its peers – fell to $24.30 a share at the end of last week, from its list price of $31 a share.
The WSJ this weekend reported that credit market turmoil may have wounded some high-profile managers – but others are swooping in to snap up cut-price assets. Goldman Sachs is launching a fund to invest in corporate debt. The fund was initially expected to total $12bn but now could top $20bn.
Finbar Taggitt, the blogging hedge fund manager, said on Monday: “With market volatility kicking in, the current market wobbles are going to sort out the men from the boys,” adding that ahead of the summer, funds will be getting out of long positions and sitting on cash.
There are bound to be losers though. His tip: there are two more ABS-focused funds out there in trouble. Eyes peeled later in the week.