Lamont profits from hedge funds

FORMER Chancellor of the Exchequer Lord Lamont today made an instant paper profit of £125,000 from hedge funds - the investment institutions that plagued him on Black Wednesday 1992 and led to his political downfall.

Lamont is a non-executive director of hedge fund manager RAB Capital, which made a sparkling debut on the Alternative Investment Market, its shares soaring from an issue price of 25p to 37 1/2p in the first minutes of trading, valuing the company at £128m.

RAB raised £8m of fresh capital in a restricted invitation for subscription handled by KBC Peel Hunt. Lamont has been awarded a million options, exercisable in five tranches between next February and 2014. He has also invested £10,000 of his own money in RAB.

London-based RAB is the creation of former Merrill Lynch executives Philip Richards and Michael Alen-Buckley, who founded it in 1999. Their 41% stakes are each worth £55m. Richards is the stock-picker behind the RAB Special Situations Fund, which has produced a spectacular 1400% return for investors in the past 15 months.

RAB, the second hedge fund manager to float after Man Group, manages funds together worth $1.1bn (£609m).

Lamont was humiliated in 1992 when the pound dropped out of the European Exchange Rate Mechanism. His doomed attempt to prop up sterling was no match for hedge funds and speculators - including George Soros - who made a fortune betting against him.