NCM Services Inc. (NCMV)

[zen222]

There are signs that hedge funds are shedding the characteristics
and principles they are best know for, namely privacy, secrecy and
exclusivity, to probe the public markets in order to attract permanent
capital, public kudos, top talent and favourable exits.

The regulators’ point of view: generally positive
In March 2007, the SEC Commissioner Roel c. Campos shared
his enthusiasm before a round-table: “…I would not be surprised if 2007
witnessed the advent of several other hedge fund managers entering our
public markets, and I would welcome such a development. If hedge fund
managers are willing to provide the transparency required of all public
companies to its investors, I have no objections to them tapping the
deepest and most liquid capital markets in the world. Moreover,
these public offerings can also benefit investors by offering them yet a
different way of getting a piece of the “hedge fund action.” Investors who
wish to share in some of the gains (as well as losses) of publicly offered
hedge fund managers would be able to do so without the high minimums,
fees, and long lock-up periods that would typically be required to invest
in the manager’s hedge funds.”

The expert’s view: the way to go
“Over the last 6 months we have continued to see more public
transactions and… I anticipate it to continue going forward,” Brian
Sniger, senior vice president of the Hennessee Group said to Opalesque.
“The big issue is about what fund managers believe they can get in the
public markets; if the valuations are not what they hoped to realise then
they won’t go public. As a benchmark a lot of them are being valued at
30% of AUM. How profitable these organisations are will ultimately
determinate their valuation. In terms of the credit crunch, some hedge
funds have exposure to credit but there are a lot of hedge funds that are
doing very well in this environment as well…. Hedge funds are very
different from private equities in that there are a lot of different ways
of managing a hedge fund. I suspect hedge fund IPOs will continue as
long as valuations are strong. There is a strong desire amongst hedge funds
to acquire permanent capital and by going public. The larger groups are the
more likely ones.”
“(With regards to the transparency issue), there already are requirements
in the U.S.; for instance a hedge fund has to file reports with the SEC for
every equity investment that they have made in the U.S. I don’t see the
different requirements when going public really exceeding the existing
ones a whole lot.”
“A lot of hedge funds are trying to diversify their business, like Citadel,
which is more than a hedge fund manager now, and I think that it is
going to continue.
Charles Gradante, co-founder of the same group, had made similar
predictions in Februray 07: “Large hedge funds are evolving into small
investment banks and ultimately I see them doing an IPO to monetize
equity interest” and thereby accelerate the already existent competition with
larger investment houses. (Forbes).

http://www.opalesque.com/files/HFIPOs.pdf