Sydney-based Ascalon Capital Managers has made its first major foray into alternative funds management and absolute returns by acquiring a strategic equity stake in boutique firm H3 Global Advisors.
The deal means Ascalon now holds a minority stake in H3, with the option to purchase up to 50 per cent of the business.
Ascalon chief executive Nick Basile said the institution prefers boutique principals to retain the majority shareholding so “they remain boutiques and the entrepreneurial spirit is kept alive”.
The investment in H3 brings its pool of funds under management to more than $3 billion.
According to Basile, the new equity holding in H3 will enable his organisation to diversify its portfolio to include increasingly popular absolute return strategies.
“We expect an increase in both institutional and retail demand for quality alpha generators. H3 is an established firm that has achieved excellent results and we’re confident it has good growth prospects. Its Global Currency and Japan funds, for example, have both ranked number one [in the LCP Performance Tables for Australian Hedge Funds for 12 months performance to April 2007], while its Global Commodities Fund ranked number two.”
The latest transaction sees H3 join MacarthurCook, First Samuel, Alleron Investment Management, Fortuna Funds Management, and Millhouse IAG as boutique managers in which Ascalon holds equity.
Formed in 1996, H3 adopts an active quantitative approach to investment. Chief executive Andrew Kaleel said he hoped the firm’s alliance with Ascalon would enable it to become a market leader in quantitative strategies across all asset classes, delivering positive returns in both rising and falling markets.
Basile revealed Ascalon is also considering exploring investment opportunities in property and distribution.
