Sciens Capital Management has priced its first collateralized fund obligation, the E240 million Sciens CFO I. The deal is collateralized by shares in 50-75 hedge funds utilizing 10-12 different investment methodologies, said John Rigas, ceo of the New York hedge fund. The transaction is the first of a planned program of at least yearly issuance, with each new issue at least 250-300 million, in dollars or euros.

The Sciens CFO broadens the hedge fund's product offering while increasing its asset under management, Rigas said. The deal was denominated in euros because it was marketed exclusively to European investors, primarily banks and insurance companies. The strategies of the hedge funds backing the CFO include convertibles, equity long/short, statistical arbitrage and emerging markets.

Sciens joins a short list of issuers who have launched CFOs this year, including AGF Alternative Asset Management with the Phenix CFO and Coast Asset Management with its Coast CFO 2006-I and II. Unlike the other issuers, Sciens is a relatively small shop, with $980 million in assets under management, not including the CFO. By contrast, Coast has $6.7 billion in assets under management.

One CDO official said he thought that Sciens' size could affect its performance. "The hedge fund world is very opaque. The bigger the funds are, the more access to information they can get," the official. Rigas countered Sciens has built up expertise and resources despite its smaller size. "Yes, the other players are bigger but we have been managing the fund of funds for three and a half years since we got started and have built up very robust models and risk management," he said.

The Sciens CFO was priced Dec. 7. The underwriter is Bear Stearns.

Samantha Rowan
Managing Editor
Real Estate Finance & Investment
Securitization News
(212) 224-3996
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