However, after apparently making progress with the latest compromise text from Sweden, opponents of tough regulation may have hit a setback.

According to a report by Jean-Paul Gauzes, obtained by Reuters, the Frenchman has recommended tighter rules than many had expected.

These include funds having to tell regulators how much they intend to borrow, the creation of a pan-European watchdog that could intervene if a fund is seen to be taking too much risk, and the same pay curbs as for bankers.

The Gauzes report, which was due to be published this week and discussed by committee next week, was seen by many in the industry as an influential report from a level-headed policy maker who had previously worked in the financial services industry and who therefore may have taken a softer line than some supporters of the bill.

There is still a long, complicated path to tread before the final set of rules is revealed, but the Gauzes report shows there is still plenty of lobbying to be done by the (within Europe at least) mainly UK-based industry.

Supporters of the bill, in contrast, keen to strike while the regulatory iron is hot, must surely be pleased that these measures are being recommended.

In the meantime, non-EU Switzerland may be looking more attractive to hedge fund managers by the day.

EU steered to strict hedge fund rules - Reuters

High fees, or no fees? - WSJ

Hedge fund bear throws in towel - FT

Hedge funds, brokers turn to poker - Sox First

New questions in Pequot case - AP

SO: Gartmore is going ahead with a listing on the LSE after all, ending a “will it- won’t it” game that has gone on for quite a bit in the past few weeks. Phew!

The company CEO, Jeffrey Meyer, says the firm does not strictly need to raise cash now to pay off any urgent debt. In fact the debt taken on to finance the management buy-out in 2006 is not due for years and years to come. Gartmore is going to market simply because it feels like it is the right moment to do it.

Hellman & Friedman, which now owns just a little over 50
percent, is expected to become a minority shareholder while still keeping two representatives in the Gartmore board.

In short: Now it is the time to “de-lever” — to use a trendy term — or pay down debt — to use a less exotic one. Only time will tell whether it will go through by mid-December.

If it does, it will become the first private equity IPO in the UK since 2007. It looks like “the will it, won’t it” game  may end up with a “yes” and a big one at that.

Nothing like a solved mystery; but surely just when the Gartmore one seemed to have been solved, it may turn out to lead to many more mysteries. Gartmore could be a trend setter, an inspiration to other companies, which could agree that the market’s appetite for IPOs is on the up.

Plus, we are told private equity companies are hungry for cash, even if it means getting lower than expected returns, which could work as a further incentive.

So just to recap: here we are at it again, wondering who will follow and when the first candidates are found — musing in due course whether or not they will go to market.

Sigh no more, gentle reader, an IPO is not just about uncertainty and suspense. One thing is certain: someone stands to make money. At least some money. If you do not care to go for the usual suspects: investment banks, lawyers, advisers, think of Gartmore’s staff.

It’s pay time for directors and employees, who are expected to sell a total of about 20 percent of the ordinary shares they own. If Gartmore sticks to its mid-December timetable, Christmas may come a little earlier for them.

Finally after months of gloom and doom here is something comforting to write about, while looking forward to a whirlwind of IPO “will they or won’t theys”.

Better this than the mantra that has kept the media and the world busy in the last 18 months: “whodunnit?”, “whodunnit?”, “whodunnit?”

Gartmore plans IPO to cut H&F stake, debt - Reuters

Harbinger Capital sells New York Times shares - Seeking Alpha

Private equity eyes illiquid hedge fund stakes - Reuters

Payback time - The Economist

Time is right for hedge funds, manager says - DealBook

Hedge fund structuring: lessons of the financial crisis - Hedge Week

Citadel’s Kenneth Griffin has been a case in point.

An article in today’s Wall Street Journal (which dubs him a ‘titan’ and a ‘hedge fund king’), says Citadel made $5 billion in trading profits in the first nine months of this year as markets recovered.

This comes after what the WSJ says was an $8 billion loss of clients’ money last year.

Until 2008, and like many top funds, Griffin was turning investors away. Those in the fund paid 20 percent of profits plus commonly 4 to 8 percent of assets, the article says.

Griffin now has plenty of new ideas — he is launching four new funds and expanding into investment banking to plug the gap left by Lehman – but he is now cold-calling investors to raise money.

How times have changed.

(See also Back in rude health and Madoff shadow looms over UBP)

Citadel’s Griffin rebounds from $8 bln losses - Reuters

Convertible arbitrage rode out poor stock market - Hedge Funds Review

Competition for hedge fund support shakes prime broker ranks - Reuters

John Paulson to launch gold fund - WSJ

However, even after 18 months which have seen them blamed for the credit crisis, infuriate investors by blocking redemptions and subject to a host of new rules designed to put a leash on the sector, it seems there are still ways to ruffle the feathers anew.

Chris Addison, stand-up comic and Malcolm Tucker’s “unbaked gingerbread man” at the heart of BBC satirical comedy The Thick of It, managed to leave mouths agape with a joke at a recent corprate gig for hedge fund traders, according to an interview in today’s Guardian.

“It was about the proposal that they should have to go on a register,” he says.

“I suggested that would be good for paedophiles because they would ­ become the second most despised group of people who have to put their name on a list.”

It didn’t go down that well, apparently. And Addison reckons it’s got something to do with the new fashion to take offence at any whiff of controversy when the gags start to fly, a la Ross and Brand or Jimmy Carr, but he also puts it down to the nature of the beast.

“Generally, people like being mildly ribbed,” he says. “The people who don’t are people who have to make a terrific effort to believe what they’re doing is worth getting out of bed for.”

Ouch.

Hedge fund stories from the past 24 hours from Reuters and elsewhere:

 Myners defends hedge funds against EU directive - Daily Telegraph

 2009 gains do not guarantee performance fees for hedge funds - Wealth  Bulletin

Hedge fund lawyer dies in Russian jail - Guardian

Founder of largest European hedge fund leaves - Reuters  ]]> http://blogs.reuters.com/hedgehub/2009/11/18/morning-line-up-65/feed/ http://blogs.reuters.com/hedgehub/2009/11/17/paul-compton-how-bitter-a-pill-is-the-draft-eu-directive/ http://blogs.reuters.com/hedgehub/2009/11/17/paul-compton-how-bitter-a-pill-is-the-draft-eu-directive/#comments Tue, 17 Nov 2009 11:04:44 +0000 Laurence Fletcher http://blogs.reuters.com/hedgehub/?p=1995 Guest blogger Paul Compton is head of product management at SunGard Alternative Investments.

The views expressed here are the author’s own and do not constitute Reuters point of view.

A recent EU report on the draft AIFM (alternative investments fund managers) directive commissioned by the Parliament’s Committee on Economic and Monetary Affairs has added to the furious debate generated by politicians and by the army of campaign groups mustered against it.

The report criticised the directive as “poorly constructed, ill-focused and premature,” and something that is likely to impose untenable costs on the alternative investments industry. The draft directive has raised a lot of hackles, but just how bitter a pill will it be to swallow in reality?

It’s clear that there’s a long way to go before the issue is settled and legislation is brought in, but it’s also clear that there’s no getting away from greater regulation of some type or another. Some aspects of the draft directive have been particularly controversial, especially the requirement to use a European credit institution as custodian.

One thing that seems sure, however, is that an increased duty of disclosure and regular reporting to investors and regulators will be a firm feature of the new regulatory landscape. A well managed fund will already have strong record-keeping and reporting processes, both internally for its own management and perhaps externally — institutional investors in particular generally insist on higher standards of transparency than would have been typical of the industry ten years ago.

No one likes to have extra requirements imposed, but you can’t help feeling that the draft directive’s disclosure requirements are unlikely to impose too onerous an additional burden given the regular reports that a well managed fund will be generating already for its management and stakeholders.

Well in advance of politicians reaching any meaningful conclusions about the future landscape, hedge fund and private equity managers have been put under greatly-increased pressure to disclose information related to valuations, risk and operational processes as more institutional investors have got into alternative investments. Madoff and other scandals in 2008 really focused investor attention on this issue, however, driving increased scrutiny on back office and risk systems in particular.

With money starting to flow back into hedge funds again, the industry is now more confident and willing to look at the systems it needs in order to respond to the more intense requirements of investors and eventually the yet-to-be-determined disclosure requirements of the EU and US regimes.

At the same time, fund managers have to control costs and in some cases adjust to significantly lower assets under management compared to their pre-crisis peak. Technology will inevitably be at the core of how hedge funds respond to this new world, so the challenge is on technology vendors to be ready with more flexible reporting capabilities, stronger investor accounting functionality, and hosted services that give funds the option of outsourcing core systems.

To hear more of Paul’s views on the alternative investments industry, click here.

Pershing reports Landry’s stake; opposes CEO bid - Reuters

Amaranth withdraws lawsuit against Touradji - Reuters

New Trend Fund Management launches U.S. equity hedge fund - Hedge Week

BofA/Merrill: Hedge funds strong, but high-water marks elusive - Seeking Alpha

Ex-Renaissance MD Frey returns with new fund - Reuters

Credit hedge funds gaining popularity with institutional investors - Hedge Week