UPDATE 3-Hedge fund manager Paulson gets HK securities licence

Thu Mar 3, 2011 11:40am GMT

Quotes

   

* Paulson received licence on Feb. 21 - records

* Fund manager has hired three former Morgan Stanley execs

* Paulson joins GLG, Soros making a beeline for Asia

* He made billions on investments during global crisis (Recasts, adds China and Fidelity references)

By Nishant Kumar

HONG KONG, March 3 (Reuters) - Hedge fund manager John Paulson, who made billions of dollars from investments during the global financial crisis, was awarded a securities licence in Hong Kong, joining a rush of global money managers to the territory.

The U.S. hedge fund manager, who bet on the collapse of the U.S. subprime mortgage market during the crisis, joins the likes of GLG and Soros Fund Management, which are making a beeline for the high potential offered by the Asian alternative investment management industry.

Anyone operating in the financial markets in Hong Kong needs the licence to deal in stocks, stock options, bonds and collective investment schemes.

Fund tracker Eurekahedge says Asia is the fastest growing region in the world for hedge funds. It projects about $40 billion will be added in 2011 to current assets of $125 billion, underlining the attraction of the region to global players.

"The establishment of material regional presence by the major global hedge fund complexes continues and these investments are cause for optimism for the sector locally," said Harvey Twomey, head of prime finance sales, consulting and capital introductions in Asia Pacific for Deutsche Bank.

The news also follows the setting up of high-profile start-ups, such as a $1 billion-plus fund planned by former Goldman Sachs' trader Morgan Sze and the founder of Tiger Management, Julian Robertson, who is backing the Nezu Asia fund.

Surging local wealth in Asia Pacific, where more than three million people are millionaires, will also find its way into hedge funds.

LURE OF CHINA

Paulson, whose bet the American mortgage market would implode made him one of the world's wealthiest people, was awarded the Hong Kong licence on Feb. 21 for his company Paulson Asia Ltd, records of territory's Securities and Futures Commission show.

Other big industry names such as Moore Capital, Maverick Capital and Viking Global Investors are also eying the region as a major destination for growth in future, especially given its proximity to China.

"There is sound logic for new managers to look at Hong Kong currently with its strong regulatory infrastructure and proximity to the Chinese market," Colin Lunn, head of business development, Asia-Pacific, for HSBC Securities Services.

"These high-profile new entrants can only be good for the industry here."

Hong Kong maintained its number 1 position as Asia's top destination for hedge fund managers in 2010 with the launch of 57 new funds that collected $2.4 billion, data from industry tracker Asia-Hedge shows.

Singapore, in second place, had 15 new fund launches and collections amounting to $673 million, the data shows.

New hedge funds focused on China were most in demand.

Mutual fund giant Fidelity is actively preparing to enter China by securing a trust company licence in one of the world's fastest-growing asset management markets, a source told Reuters last month.

Fidelity's star manager Anthony Bolton is well known in China. Last week, Bolton's Fidelity China Special Situation Fund wrapped up a share offering, raising its targeted proceeds of 166 million pounds ($269 million), more than a third of which came from new investors.

Paulson, who earned an estimated $5 billion in 2010 mainly through bets that the U.S. economy would recover, has hired Xiaoli Deng, Sandra Lee and Winnie Wong, formerly with Morgan Stanley , for roles in his company's Hong Kong operations, the commission records show.

About a fifth of 100 leading institutional investors in hedge funds surveyed by alternative assets research firm Preqin expressed an improvement in their levels of confidence in hedge funds in 2010, with nearly two-thirds saying Asia would present the best opportunity in 2011. (Editing by Chris Lewis and Muralikumar Anantharaman)

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