New Star sets up convertible arbitrage hedge fund

The firm hired Sajid Ramzan and Chris Beton from Soros last week to develop the new convertible arbitrage fund, supplementing the four existing long-short hedge funds the company currently manages. Ramzan and Beton have worked for some 15 years managing convertible and statistical arbitrage desks at Soros, Commerzbank and Deutsche Morgan Grenfell.

The fund aims to raise $250 million–500 million in the medium term, says Ravi Anand, corporate finance director at New Star, and currently has two investors.

Anand said convertible arbitrage hedge funds were still showing strong returns despite low convertible bond issuance seen over the last year. The CSFB Tremont Convertible Arbitrage index showed a return of 4% in 2002, whereas the Standard & Poor's 500 equity index fell by 22%.

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