The announcement today that Dexion Capital is the only adviser and placing agent for listing one of the hedge industry's flagship funds is only the latest in a series of wins for the diversified fund servicing boutique.
If the decision is taken, the next question is, ‘how?’ Anand says: “The job of distribution for Ucits funds can be quite different to private placement for offshore hedge funds, and hedge managers can struggle. The question for managers is, can you conduct your own distribution to be as effective as a traditional shop? There are bank platforms, but if you choose those, you cannot do third-party marketing.
“The task for managers is not client acquisition, it is about servicing the client successfully, and the feedback we have got about some of the larger platforms is it is just not possible to service clients effectively, platforms are not incentivized to do that.”
Ana Haurie (pictured), group managing director, explains the continued expansion: “We do not want to lose any touch points with our investors or clients. In the past funds could do a lot of work with Dexion, but then for trading, for example, they had to go elsewhere.”
She emphasizes Dexion did not expand into the transactional income areas of market making and corporate advisory because the firm saw a slowing of recurring fee income if fund performance slowed. “It was quite the opposite, not that we thought performance or assets would shrink. In 2009 I do not think any of us thought the [difficult times] would last for two or three years, and we wanted to build out the business, which continues to be a priority for us.”
Dexion also headed independent asset raising for the Ucits-compliant variant of Man Group’s computer driven AHL fund, bringing in $140m for it.
This was part of the extensive private placement asset raising Dexion has done for open-ended, unlisted hedge funds – a less publicly visible part of the firm’s work.
On the open-ended fund front, Dexion has worked for James Caird, spun out of Moore Capital in 2008, and is currently privately placing units in a commercial real estate fund in China.
By expanding into research, Dexion will also educate investor-clients more about listed infrastructure, commercial property and private equity funds.
Dexion’s 43 staff include nine in sales, two market makers, three in corporate finance, and two – soon to be three – in research.
Haurie says the more focused teams are an advantage for clients. Some Ucits platforms take on hundreds of funds, questioning whether each gets equal focus, for example.
Skinner says an advantage Dexion has is it is “investor-led, with secondary flow driven by investor trades and ideas, rather than being influenced by proprietary capital”.
Dexion’s main activities in investment trust promotion in Europe are in Scandinavia, the Netherlands and Switzerland, Haurie says.
Investors in other European countries appreciate daily liquidity – which shares in listed funds can offer – but some do not want the risk of discounts to NAV, while others are nervous of hedge funds, Haurie says.