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Hedge funds fight back at growing attack

Date: Wednesday, February 14, 2007
Author: Tom Burroughes and Rupert Steiner, Thebusinessonline.com

Concern is mounting across the City of London’s thriving $400bn (£267.6bn, €305.8bn) hedge fund industry that it is soon to be the target of a vilification campaign similar to that being waged against private equity.

The fears were intensified after last weekend’s calls from the G7 central bank officials and finance ministers for more “vigilance” on hedge funds. One senior hedge fund executive told The Business: “We are being targeted like pariahs by the very individuals who gain pecuniary advantage from our legitimate business – it is rank hypocrisy.”

Another said: “We have been watching what has happened to private equity, with Damon Buffini [boss of Permira, the private equity giant] being singled out by trade unions and Labour MPs. We will be next. These guys had better watch out or else they will chase the industry away”.

While industry figures accept that some oversight of their business is needed to reassure investors, they are worried that any new rules will misunderstand the nature of their business. “Anything that is obscure or not well understood is a convenient scapegoat,” said Patric de Gentile Williams, chief executive of PCE, a UK-based hedge fund company with about $1bn of assets.

Peter Lenardos, head of global research at Churchill Capital, a UK-based investment firm working with hedge funds says: “The benefits the industry provides are returns to investors, market liquidity for everyone and funds that can stand up to companies.”