RPT-UPDATE 1-Ex-Lehmanites start distressed CDO, CDL fund

RPT-UPDATE 1-Ex-Lehmanites start distressed CDO, CDL fund
Thu May 13, 2010 11:20pm EDTRelated NewsFormer Lehman execs launch distressed structured credit fund
Thu, May 13 2010
Former Lehman execs launch distressed structured credit fund
Thu, May 13 2010
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Tue, May 4 2010
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UPDATE 2-US hedge fund Fortress eyes Asia comeback - sources
Tue, May 4 2010(Repeats item first filed late on Thursday)

Financials

* Two former Lehman bankers aim to raise $50 mln in new fund

* Oracle Investment Fund focused on CDOs, CLOs (Adds details, founder quotes, background)

By Parvathy Ullatil

HONG KONG, May 13 (Reuters) - Former Lehman Brothers Asia executives, who headed the bank's strutured products division and its syndicate business, have launched a hedge fund that will invest in distressed structured credit assets.

Oracle Capital aims to grow assets to $50 million over the next few months, said Fredric Teng, one of founders of the company.

The fund has received backing from a U.S. institutional investor and has also received investment from some institutions in the region and former senior executives from Lehman Brothers.

Institutional investors have shied away from putting their money in start-ups in Asia in the wake of the financial crisis despite the high pedigree of many of the new managers behind these funds.

"Our fund is a new and specialized strategy which might make it harder to tick some of the boxes for institutions, so the fact that we raised institutional money is very encouraging," Teng said.

The fund is looking to invest in collaterlised debt obligations (CDOs), collateralized loan obligations (CLOs) and other structured credit paper, that were hugely popular in Asia till the financial crisis hit, hammering these assets.

"While there is a lot of negative press surrounding CDOs, many people recognise that there are a lot of opportunities in that market after the dislocation that we have seen," said Teng's partner, Leon Hindle.

Hindle ran Lehman's structured products division in Asia, which gained notoriety after one of its derivative products, dubbed "minibonds", tanked following the Wall Street bank's collapse in 2008, burning tens of thousands of retail investors in Hong Kong and Singapore.

"People can criticize CDOs and structured products, fairly or unfairly, but if you want to be a fund manager managing these products you really need to have been involved in the CDO business," said Hindle. (Reporting by Parvathy Ullatil; Editing by Lincoln Feast)