Summit News

Toscafund to launch mid-cap UCITS III fund

LONDON (Reuters) - Hedge fund firm Toscafund, will launch later this month a UCITS III version of its mid-cap fund following demand from private clients, its chief executive said on Tuesday.

The UCITS version fund will be launched in mid-March on a platform provided by Deutsche Bank DBKGn.DE and expects to close at $300 million, Martin Hughes told the Reuters Private Equity and Hedge Fund Summit in London.

The existing mid-cap fund has already raised $110 million.

UCITS, or Undertakings for Collective Investment in Transferable Securities, are EU-domiciled mutual funds targeting retail investors.

Creating a UCITS III version, which would comply with

European Union regulations on transparency and liquidity, will require no change in investment strategy, Hughes said.

He said that some 80 percent of the fund’s holding could be liquidated within a week, adding the UCITS III version will be “an alternative to the index-tracking large investment trusts.”

Because of their high liquidity, UCITS have grown in popularity in the aftermath of the credit crisis when many investors found themselves locked into investments when some securities markets turned illiquid and asset managers imposed restrictions on withdrawals.

On Monday hedge fund Cheyne Capital told Reuters it was set to launch a UCITS III mergers and acquisitions fund.

Hughes said: “We have been asked by private clients to make it available; Deutsche Bank has facilitated that and I would expect quite a big interest.”

Toscafund took nine months to choose the platform and considered Deutsche Bank and Bank of America BAC.N.

The former prevailed because it allowed the hedge fund manager to keep its name on the UCITS fund version.

“It lets us keep the name, the fees were the same -- it will stay Tosca Mid-cap. It is the first and I would suggest that, because it is the only one that has been requested, it would be our last,” the CEO said.

Editing by Greg Mahlich