Dexion Absolute has announced a redemption offer for up to 25% of its outstanding shares. Anyone who opts for that will probably have to wait until Q1 2016 to see any money (as they liquidate the investment in Aurora Offshore Fund II) and then will have to wait longer for the balance of their investment given the illiquidity of the underlying holdings.
As the fund shrinks, the Board is wondering how they could amend the investment policy to make it more attractive to investors. the plan they have come up with is to invest the fund in early stage hedge funds. These vehicles require a longer lock up – maybe two or three years – (so if the strategy doesn’t work it would take even longer to wind the fund up) but in exchange early stage investors get a share of the management fees from these vehicles and typically one or more of the following rights: reduced advisory fees, additional investment capacity, and protective rights in the event of a material change in the manager’s business. The management fees would turn into dividends for Dexion shareholders.
They say the new fund would invest over a period of 42 months which would tend to imply that Dexion Absolute would be able to extend its life by a minimum of six and a half years. There is no mention of what will happen if investors oppose the proposals.
DAB / DABE / DABU : Dexion Absolute planning change of focus