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Dexion Absolute confirms £97 million reverse tender
by Matthew Goodburn on Jan 18, 2010 at 13:07
Listed Hedge fund Dexion Absolute (DAB) has confirmed details of a reverse auction tender offer for 10% of its net assets; an action that the action triggers continuation votes for all three of its share classes.
The move, which equates to around £97 million based on its 31 December NAV, will mean assets are returned via a reverse auction tender which would see cash returned to investors seeking an exit before the end of February.
The tender discount will be set via the auction process and subject to a minimum discount of 2%.
The company said continuation votes would be held for each share class on 12 February after the discount control mechanism was triggered at the end of December.
The vote was widely anticipated, considering the trigger had been set at a 5% discount, and after a year in which the sterling, dollar and euro-denominated share classes had averaged a 17% discount.
If the vote fails a full exit will be offered to investors at the NAV price.
Broker Numis Securities noted that there were four reverse tenders from listed hedge funds last year, with all four clearing at tighter discounts to the respective funds' prevailing market price.
Numis said that the investment environment and liquidity had improved substantially since DAB's last tender a year ago, with the Dexion Absolute GBP (Ordinary Share) sterling share class alone, up 63% in the year to the end of December.
It said: 'In line with previous reverse auctions we expect the tender to clear at a narrower level than the current discount (9%), which suggests it will be in the region of 5-7%.'
DAB said it had 6.7% of its portfolio in illiquid assets, compared to 17% a year ago.
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