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Comment: From space flight to hedge fund investment

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South African entrepreneur Mark Shuttleworth, who gained worldwide fame in April 2002 when he paid an estimated USD20m to take part in a space flight, has demonstrated his faith in the fut

South African entrepreneur Mark Shuttleworth, who gained worldwide fame in April 2002 when he paid an estimated USD20m to take part in a space flight, has demonstrated his faith in the future of the hedge fund industry with a USD10m investment.

The so-called ‘first African in space’ has invested in the Insparo Africa and Middle East Fund, which was launched by London-based Insparo Asset Management in May last year and already counts Michael Spencer, the billionaire founder of interdealer broker Icap, among its backers.

This may be Shuttleworth’s maiden hedge fund investment, but he is no stranger to the alternative investment industry, having in 2000 set up HBD (Here Be Dragons) Venture Capital, a business incubator and venture capital provider mainly targeting fledgling South African businesses.

Shuttleworth is renowned for his timing; he sold Thawte, the internet security business he founded in 1995, to VeriSign for around USD575m in December 1999 – just before the dotcom bubble burst.

Now he has made a sizeable hedge fund investment at a time when wealthy individuals and institutions are being extremely cautious. But for those brave enough, there are opportunities aplenty, with companies that until recently might have shunned investment by hedge funds now actively seeking their money.

An overwhelming majority of public companies surveyed by Bank of New York Mellon are anxious to lure hedge fund capital, with 89 per cent actively arranging meetings with managers. ‘Companies have realised that hedge funds can be a viable source of long-term investment,’ says Guy Gresham, head of the bank’s investor relations advisory team. Looks like a buyer’s market – or a hedge fund investor’s.

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