Cheyne Capital Hedge Fund Overhauls Queen's Walk Debt Fund

By Laurence Fletcher

Cheyne Capital is overhauling its Queen's Walk Investment fund, hit hard by the U.S. subprime crisis, by cutting its payouts and raising money to spend on fewer hazardous pluses to widen its appeal.

Cheyne Capitals Hedge fund, which will adjust its name to Real Estate Credit Investments, plans to raise closely 25 million euros ($32 million) through a portion placing and open offer, it said on Tuesday.
It will use the money to purchase fewer hazardous elements of residential and mercantile property-backed debt, taking its focus away from junk or unrated debt.
"We're derisking the constitution and moving up the capital structure," fund manager Shamez Alibhai told Reuters.
At 1414 GMT Queen's Walk shares were down 5.6 percent at 2.28 euros.
Queen's Walk was amongst a clutch of stock interchange listed funds whose portion prices fell dramatically in 2007 as the valuations of its investments in the riskiest elements of subprime mortgage-affiliated debt fell.
"We want to move Queen's Walk away from something that's more perplexed and unmanageable to explain to investors, to more fluid and more transparent securities. We hope by altering the investment policy we'll see a good deal of decompression in the discount to NAV (net asset value)."
The fund, which has been selling on a discount to NAV of 35-40 percent not so long ago, plans to cut the dividend on its standard shares, even though it will issue investors with preference shares paying an 8 percent coupon.
This will mean the total payout to stockholders are going to be cut by around 40 percent to 7-8 percent, Alibhai said.
He added that real-estate debt looked cheap and said the fund would growingly purpose for capital growth.
"We're attempting to remainder income distribution and capital growth," he said.
The fund's magnification to fewer hazardous real-estate debt is set to rise to around 50 percent from 25 percent of the portfolio after the fund invests the capital it raises, he added.
* Issues 13.3 mln shares at 2 euros, to raise 25 mln euros
* Bonus issue of preference shares paying 8 percent
* Will cut total payout to investors to 7-8 percent
* Aims to cut discount by laying out capital in fewer hazardous debt
* Shares down 5.6 percent

Article Source: http://interpret.zar.vg

About The Author
Ch eyne Capital Hedge Fund was a founding member of the Hedge Fund Working Group and its funds comply with the best practice standards of the organisation.