Cadiz to set up South African hedge fund

South African investment banking group, Cadiz Holdings, plans to set up its first hedge fund, a long/short equity fund called Hedge Funds Solutions, on November 1.

The fund will start with R30 million ($1.8 million) capital seeded from the parent company, but will look to top out at R500 million to R600 million, according to Ram Barkai, managing director at Cadiz specialised asset management, the alternative investment and structured product arm of Cadiz.

The hedge fund business in South Africa is still at a relatively embryonic stage, but Cadiz is confident the fund will work. “The level of sophistication in the derivatives market in South Africa has grown a lot in the last five years,” said Barkai. “There is always a buyer of risk: every time we think the risk-takers have disappeared, someone else raises their head and shows a desire to take risk.”

Hedge Fund Solutions will focus on South African equities, and target institutional clients within the country. Nick Middelmann and Arno van Wyngaarden will manage the fund.