HSBC Halbis plans India mid-cap hedge fund

By Laurence Fletcher

LONDON (Reuters) - HSBC Halbis Capital Management told Reuters on Monday that it plans to launch a long-short India mid-cap hedge fund because it sees good opportunities there and that it wants to launch more emerging market funds.

Speaking at the Reuters Hedge Fund & Private Equity Summit in London, Bill Maldonado, head of alternative investments at HSBC Halbis, said the firm is looking to separate out an India mid-cap portfolio of up to $400 million from its main India market neutral fund.

"The fund managers there now do see a lot of opportunities in the mid-cap area and they would love to do a mid-cap fund, and we're looking very seriously at doing that," Maldonado said.

"We'd like to separate it from our main hedge fund. If we see opportunities we'll put those into a different product so people know exactly what they're getting."

Such a launch could take advantage of recent falls in India's stock market. Over the past three months, for example, the BSE Mid-Cap .BSEMC is down 36.9 percent and is on a price/earnings ratio of 11.3 times forecast earnings, compared with 15.5 times for the benchmark Sensex .BSESN.

Maldonado said the mid-cap fund product would probably have to have investor lock-ups and very different liquidity terms to the main India fund.

The new portfolio would be $400 million or less in size and would be launched in the third quarter of the year, he said.

Maldonado also said the group wants to launch further emerging market-focused hedge funds to take advantage of these economies' growing global significance.

"We're big believers in the longevity of the increasing importance of emerging markets so we'd like to expand our hedge fund emerging markets products.

"For example, something like an Asia hedge fund in that long-short market neutral type format that we prefer ... That would be something that we'd very much like to get done this year and maybe one or two other similar kinds of products as well."

(For summit blog: summitnotebook.reuters.com/)

(editing by Elizabeth Fullerton)