Hedge funds head for floats

A CLUTCH of firms from the ultrasecretive hedge fund industry are on the verge of floating on the Stock Exchange, according to the boss of London's first - and so far only - listed standalone alternative investment business.

Michael Alen-Buckley, co-founder and chairman of RAB Capital which floated on AIM last year, believes that not only are rivals limbering up for flotation but that hedge funds can benefit from throwing off the shrouds that give the industry such a negative Press.

'It will be interesting to see who else follows our lead. But I would not be surprised to see developments somewhere in the industry over the next year or two,' said Alen-Buckley.

'I think our decision to list has been proved right. It is not without its extra work. However, the additional responsibility and need to explain strategy to investors leads to open dialogue and open architecture.'

Speaking to HedgeFundManager magazine, Alen-Buckley said he believes floating will enable hedge funds not only to invest in muchneeded back-office and legal and compliance staff, it will help raise the profile of such specialist, often unregulated funds to raise their profile in the emerging retail market of selling direct to the market.

RAB itself is aiming to tap the socalled grey investor with a marketing tie-up with the Saga holidays and personal finance group. Alen-Buckley indicated that two rivals are similar in outlook to RAB - GLG Partners and Thames River Capital, controlled by property magnate Sir John Beckwith.

GLG, Europe's biggest hedge fund group, had been a candidate for flotation for some months after proposals for a deal to be bought out by 20% shareholder Lehman Brothers fell apart.

GLG's plans have not been helped by the emergence of investigations by the Financial Services Authority and its French equivalent, the AMF, over separate convertible bond offerings in which it is said to have been involved.

However, most hedge funds are unlikely to welcome the public gaze into their private finances that a float would bring. GLG goes to great lengths to conceal its accounts though it is reported that founder Noam Gottesman earns £30 million a year.

RAB Capital was embarrassed recently when the Evening Standard and This is Money revealed that chief executive and co-founder Philip Richards more than doubled his pay last year to £5.4m, making him the best-paid listed company boss outside of the FTSE 100.