Institutional Investor's Alpha Magazine - December 2008 / January 2009 - (Page 13)

by securing the publishing rights to original scores used in feature ﬁlms and television programs. The music-for-ﬁlm fund, dubbed Resonant Music I, was formed in November in conjunction with Cutting Edge Music Holdings, which owns the rights or has provided the scores to about 400 ﬁlms, including Atonement and Harry Potter and the Goblet of Fire. Cutting Edge, with ofﬁces in London and Los Angeles, will help $1.4 billion Bramdean find deals “with broad international appeal” in ﬁlm and television. The fund has ﬁnanced more than 20 new projects with such ﬁlm companies as Dark Castle Entertainment, Legacy and Matador Films, in addition to several independents. Its goal is to invest in as many as 200 projects — primarily in the U.S. and the U.K. — over the next four years. By building a catalogue with longterm rights, Bramdean hopes to create a sustained revenue stream from royalties along with the potential for capital appreciation, says Rachel Durkin, a manager for the fund. “Bramdean is looking for truly differentiated investment opportunities and believes that the fund will deliver attractive returns for investors that are uncorrelated with traditional as well as other alternativeasset classes.” Because its income is typically separate from ﬁlm earnings and is not easily controlled by distributors or producers, ﬁlm score investment can be safer than investing in the production itself. This is particularly true in Europe, where music has a gross share of box ofﬁce income, Durkin adds. Resonant Music I is for established Bramdean clients, but a bigger fund is in the works for new investors. — D.S. s hedge fund administrators struggle to survive in a shrinking industry, Butterfield Fulcrum Group provides the ﬁrst telling example of consolidation. Bermudabased BFG is the product of the September merger of Butterfield Fund Services and hedge-fundservicing specialist Fulcrum Group. Private equity ﬁrm 3i, a shareholder in Fulcrum, provided most of the funding for the merger, with a $78 million investment; 3i and Butterfield Bank, which helped with the funding, will retain an equity stake. BFG, which has about $100 billion in assets under administration, And So It Begins A hopes to capitalize on its bigger scale in a sector increasingly squeezed for cash. Expenses, market turbulence and investor outflows are putting a dent in service provider revenues. “Pricing is people-intensive, staff are scarce, and the global operations needed to service hedge funds mean big overheads,” says Steven Forsyth, an investment management consultant for London-based information technology company Morse. Akshaya Bhargava, who formerly presided over an outsourcing arm of Indian giant Infosys Technologies, has been named CEO. “Clearly, servicing hedge funds requires expertise,” says Bhargava, who prizes scalability. “But it’s still an operational business that can be converted into an assembly line.” Any administrator unable to contain costs is likely to become an acquisition target. The industry is split 60-40 between banks like Goldman Sachs Group and JPMorgan Chase & Co. and independent providers like Citco and Caceis Investor Services. Some banks will be try to get rid of such noncore assets. For the independents, consolidation targets will be small and midtier specialists. Firms with scale will buy smaller providers for the value of their major clients and jettison less-lucrative customers. — H.C. UPDATE Sweet Home Chicago: A Bigger House n a rare instance of a merger not driven by the government or forced by downsizing, a pioneering Chicago fund of hedge funds is consolidating with a sister ﬁrm. Glenwood Capital Investments, founded in 1987, joins Man Global Strategies, which focuses in part on hedge funds, in a uniﬁcation that Man Group, the parent of both, hopes will create vast synergy. “If you can improve the information that you have on managers, you can deliver more transparency,” notes John Rowsell, who was in charge of Glenwood and will lead the new Chicago-based Man Glenwood Strategies as its I chief investment ofﬁcer. The ﬁrm — whose combined assets under management total $7 billion — will have a powerful U.S. presence and an international reach, given its domestic Glenwood clout and Man Global of fices in London and Hong Kong. The merger is the latest in a long series of Chicago chapters in the history of funds of funds, invented in 1971 by Richard Elden, founder of that city’s Grosvenor Capital Management (see “Sweet Home Chicago,” November 2008). In 2000, Man acquired Glenwood, which was founded in 19 87 by Frank Meyer, a former partner at Grosvenor. The new arrangement is expected to give Glenwood more tools to help clients affected by difficult markets, especially those who need more liquidity. Rowsell says the recent market turmoil has made it clear that some hedge funds have too much money locked up in illiquid assets, making it difﬁcult in many cases for investors to cash out when they need to. In turn, Glenwood’s reservoir of hedge fund knowledge is expected to be a boon to clients of Man Global Strategies. The beneﬁ ts may not be immediately apparent, however. David Gold, a manager research consultant at Watson Wyatt Worldwide, a New York–based investment consulting firm, says the initial result may be self-serving in that it will curb competition for customers. Longer term the deal should give clients more ﬂexibility in choosing whether to put assets in commingled funds of funds or keep their money separate. — Ann Logue DECEMBER 2008/JANUARY 2009 • INSTITUTIONAL INVESTOR’S ALPHA • 13

Table of Contents Feed for the Digital Edition of Institutional Investor's Alpha Magazine - December 2008

Institutional Investor's Alpha Magazine - December 2008 Contents Letter from the Editor Longs & Shorts Inside the Trade Pension Corner The Good Guys Interview: Stanley Fink Cover Story: The New Regulatory Reality United States: The Usual Suspects Europe: Flirting with Unity Asia-Pacific: What Asian Contagion? In Theory In Focus Strategies Research Center Alpha Bytes Unhedged Commentary

Institutional Investor's Alpha Magazine - December 2008

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.