LIM Advisors sees new $200-$500 mln fund

By Jeffrey Hodgson

HONG KONG (Reuters) - Hedge fund manager LIM Advisors is looking to raise as much as $500 million for the launch of an Asian special situations high-yield fund that will tap growing opportunities in less-liquid securities, the firm's chairman said.

The new fund will build on trading strategies developed in the firm's flagship $460 million LIM Asia Arbitrage pan-Asian multistrategy fund, said George Long, who is also the founder and chief investment officer of Hong Kong-based LIM.

"We've always done special situations in high yield, and we made extremely good money out of that over the last eight years," he said in a telephone interview ahead of the Reuters Hedge Funds and Private Equity Summit in Hong Kong.

"Special situations can be a fairly broad category, including private debt, private placed stock, it can be private convertibles, it can be corporates coming out of restructuring ... there's a whole series of what it possibly means."

Long, an Asia fund industry veteran who set up LIM in 1995, said the new fund will enable the firm to take larger positions in less-liquid securities that may be harder to value or harder to hedge, but have good potential upside.

The LIM Asia Arbitrage Fund, which allows monthly redemptions, has a limit on how much of these types of securities it can hold.

"As we find more and more of those opportunities, we're pushing up against that limit, so we'd like to have a different vehicle that can do these other things in bigger scale," he said.

LIM manages a total of $825 million in assets, including a $14 million commodity fund that it is opening to outside investors.

The former CIO of Gartmore Asia and the Asian operations of what is now Barclays Global Investors said he will not launch the new special situations fund unless it raises at least $200 million.

"Many of the special situations we see are $10 million, $20 million or $30 million pieces, so it has to be by definition a much bigger fund," he said.

OPENING COMMODITY FUND

The new hedge fund would be the eighth launched by LIM, which was tied for 13th-largest among Asia-headquartered hedge fund firms in 2006, according to Institutional Investor's Alpha magazine.

Its other funds include the LIM Japan Fund, LIM Asia Alternative Real Estate Fund, three China-focused vehicles, and the LIM Asia Commodities Fund, which invests in Asian commodity-linked stocks and commodity futures.

Long said after running the commodity fund with internal capital since early 2005, LIM will seek outside investors.

"It's probably the best way to play China, because you've got all these commodity producers, particularly Australian or Chinese firms, who basically benefit from China's growth," he said.  Continued...