The fund will focus on Taiwan, Hong Kong and mainland China. The approximate split of the portfolio will be 40% each in China and Taiwan, with 10-12 long positions per country, with the remaining 20% in Hong Kong. There will be a maximum of around 60 positions. Companies listed elsewhere that are construed as China plays by virtue of their operations may also be included - but their total will be capped cumulatively at 20% of the fund.
FrontPoint targets institutional asset managers and marketing will begin shortly to US institutions, banks and pension funds. The fund will offer quarterly liquidity. Within the first year, there will be a gate permitting withdrawals of 1/3rd per quarter or a redemption fee of 5%.
The fund has a maximum gross exposure of 150% and target volatility will be in the mid teens. Target returns will be 25% net per annum.
FrontPoint is a platform based in Greenwich, Connecticut. In Hong Kong the fund managers are executive director James Soutar alongside Kenrick Leung. The FrontPoint Asia-Pacific Fund is also run out of Hong Kong. This $400 million fund was up 17.5% in 2005. In addition the platform also offers the $1.1 billion FrontPoint Japan Fund, which was up 35% in 2005.
ôRecent volatility presents us with good investing opportunities,ö says Kenrick Leung, the portfolio manager. ôDRAM and Chinese property stocks both look interesting at present.ö Soutar and Leung will be assisted by China Specialist Simon Qian and their Asian trader Andrew Jans. They plan to hire one more China analyst with experience in the A-share market.
Credit Suisse and Goldman Sachs are the fundÆs prime brokers. The fund administrator is Citco, lawyers are Davis Polk and the auditor is Ernst and Young.