Ubequity Takes Stake in PCE Investors

Date: Tuesday, December 11, 2007
Author: Money Central.com

LONDON (AP) - Canadian private equity firm Ubequity Capital Partners said Monday it is taking a majority stake in PCE Investors, an infrastructure platform for hedge fund managers.

Under the deal, for an undisclosed amount, Ubequity will buy a controlling stake in PCE Investors from the Schneider Group, and inject a "significant amount" of capital to further develop the business.

London-based PCE Investors launched its hedge funds platform in early 2005, giving managers instant access to its compliance, risk management, technology and marketing systems. So far, it has signed on 14 investment teams managing $1.4 billion across 17 funds.

In exchange for the support, PCE Investors collects 15 percent of the managers' revenue each year.

Numbers of these kinds of platforms have grown as setup costs for new hedge fund managers rise along with investors' requirements for infrastructure and transparency.

"It can take up to 12 months and cost $1 million to set up a fund. With PCE, it takes four weeks and $50,000. Then the manager can run the portfolio while someone else takes care of all the aspects of running the company," said George Cadbury, a partner in Ubequity's London office, who said his firm has been looking at PCE as a potential acquisition since the beginning of the year.

Chris Day, PCE founder and chief operating officer, said the platform also appeals to institutional investors in hedge funds, since it reduces operational risk and they only have to do due diligence once on the PCE systems if they want to invest with multiple managers.

"The hedge fund sector is moving more and more to institutional requirements on transparency and systems, which will keep raising the bar for new managers," Day said.

Ubequity's capital investment will be used to beef up marketing operations, to open new offices in Toronto, New York and Switzerland, and to launch a $100 million fund of hedge funds in the first half of 2008 that will provide seed capital to managers on the PCE platform.

The Schneider Group, a trading services and broking firm, will retain a minority stake in PCE Investors.

(This version CORRECTS Corrects Cadbury's title to partner sted managing director.)