New York: Oracle Capital, a hedge-fund company founded by two former Lehman Brothers Holdings bankers, aims to raise $50 million (Dh183.9 million) over the next two months to buy structured credit products, whose plunge contributed to the worst financial crisis since the 1930s.
The first fund, Oracle Investment Fund targeting US investors, started trading on May 12, and a second targeting non-US investors will be set up in June, Leon Hindle, a partner of Hong Kong-based Oracle, said on Thursday.
The funds will seek to buy structured credit products, including collateralised debt obligations, from Asian banks, insurers, corporations and funds, which are using the market's recovery to sell some of their marked-down holdings. Asian financial institutions have posted losses and writedowns of $41 billion since the credit crisis, partly due to investments in highly rated US and European securitised products.
"It would be quite unusual to find any type of financial institution that didn't have any exposure to it," Hindle said. "The market has rallied. We're mid-way through the recovery from this crisis, but there's still a lot of uncertainty."
Asian companies, hoping to boost investment yields on excess capital before the financial crisis, have bought more than $50 billion of structured credit products, estimated Fredric Teng, another Oracle partner. Few funds in the region have the expertise to analyse and find underpriced structured credit products, making the investment strategy more profitable for Oracle, he added.
"It's a huge market relative to the number of people that are in it," said Hindle. "There's still a supply overhang."
