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RPT-UPDATE 1-Polar Capital forms global convertibles team

* Hires three managers from Vicis Capital (Fixes spacing in first paragraph)

* AUM up 20 percent to $3 billion

* Shares up 2.08 percent at 0902 GMT

LONDON, Oct 15 (Reuters) - Specialist investment firm Polar Capital POLR.L has hired a team to launch a global convertibles hedge fund, it said on Friday, at a time when convertible bonds are outperforming and issuance is strong.

Polar Capital, which recently acquired financial funds manager HIM Capital Holdings as part of its strategy to grow specialist expertise [ID: nLDE68E08B], has hired David Keetley, Steve McCormick and Kendrick Li, all from Vicis Capital.

At its peak in 2008, Vicis Capital, which is based in London and New York, managed $5.8 billion with $3.3 billion committed to convertibles. In 2009, the company was forced to suspend redemptions at its flagship Vicis Capital Fund due to heavy losses.

Convertible bonds can be exchanged for shares at a pre-stated strike price, giving them both bond and equity-like characteristics, making them popular with yield-hungry investors.

With world stock markets at a six-month high, the convertibles market has come roaring back [ID:nLDE69617G], after slumping in 2008 due to forced selling by hedge funds bruised during the financial crisis.

Polar’s planned convertibles fund, which will launch in November, will hold more than 50 convertible positions, with a focus on geographic and sector diversification at the outset.

Keetley said joining Polar offered the trio the opportunity to expand a global convertibles franchise with the backing of a strong platform and a culture focused on investment outperformance.

There is about $5 trillion in U.S. and European corporate debt that needs to be refinanced in the next five years while bank balance sheets have shrunk and many convertible hedge funds are still closed, he said.

He also identified a strong resurgence of convertible issuance from Asia as another opportunity.

“Taken together this will translate into more convertibles investment opportunities with less competition,” Keetley said in a statement.

Polar’s recent acquisition of HIM helped boost assets under management 20 percent to more than $3 billion in the six months to the end of September, it said. It also reported positive net fund flows of over $280 million and performance fees of 1.8 million pounds.

Polar shares were up 2.08 percent to 124.75 pence at 0902 GMT. (Editing by Sinead Cruise and Karen Foster)

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