FIRST GULF BANK LAUNCHES AL SAQER HEDGE FUND FIRST MACRO-STRATEGY FUND MANAGED BY UAE BANK

Abu Dhabi-headquartered First Gulf Bank, which last week reported record net profits for 2005 of AED 1.06 billion, today launched its first open-ended, macro-strategy hedge fund - Al Saqer (The Falcon) - to offer investors absolute return generation with low volatility and a low correlation to traditional asset classes, such as equities and bonds.

“This launch is in line with First Gulf Bank’s strategy of offering clients sophisticated products. Al Saqer will adopt a macro-strategy not being limited to any one asset class, market, trading style or instrument; instead will enjoy extraordinary flexibility regarding investment policy and investment strategies.” (Andre Sayegh, Chief Operating Officer)

“We believe this Fund to be unique,” said Andre Sayegh, “whereby we will reserve the right to invest in the booming property markets of Abu Dhabi and Dubai, and elsewhere for that matter.”

“Hedge funds currently marketed here are operated from Tokyo, London or the U.S. Al Saqer is UAE-based for the UAE investor, with eyes firmly focussed on the impressive returns that can be recorded here with careful and deft management. Al Saqer offers a good alternative, or complement, to more traditional investments.”

Al Saqer is designed to achieve the highest return on capital consistent with principles designed to minimize the risk of capital loss through investments, both long and short, across global markets.

The Al Saqer Fund will include, but not be limited to, foreign exchange trading, government and corporate debt securities, interest rate instruments, equity securities, stock indices, real estate, precious metals and base industrial commodities through investment in the spot, forward, futures, options and swap markets as well as in hybrid securities and other derivative instruments.

“Hedge funds are not restricted to any one asset class,” said Zafar Habib Khan, Chief Investment Officer, First Gulf Bank. “Al Saqer, because it will invest in a variety of assets and use many different strategies, will aim for a consistent, absolute return, regardless of the direction of the local stock market.”

“We will invest according to available opportunities in all kinds of geographic locations, focusing primarily on the Gulf Co-operation Council states of the United Arab Emirates, Kuwait, Qatar, Bahrain, Oman and Saudi Arabia. Furthermore, because Al Saqer is a macro fund, we will apply whichever strategy we see fit as and when opportunities present themselves.”

“The Fund will invest in both conventional and derivative products. The instruments may trade on an exchange or be over-the-counter and may be securitised or non-securitised.”

Al Saqer is aimed at private investors or corporations with excess liquidity that are looking for an absolute risk-return as opposed to simple, equity-based returns. The minimum initial investment is AED 1 million with subsequent minimum subscriptions, accepted on a monthly basis, of AED 500,000. Investment is open to all except U.S. nationals.

“Al Saqer is for investors who desire long-term exposure as some of our investments may not be liquid and gains derived from them will be over a longer time horizon. It is not suitable for investors wanting quick market exposure on a daily, weekly or even monthly basis.”

Investors can redeem Al Saqer earnings on a quarterly basis after serving 30 days notice. Redemptions in the first year will be subject to a fee of five percent of net asset value, thereafter they are free of charges.

The relatively lightly regulated global hedge fund industry, which until recently was only open to the wealthy, is now estimated to have around 1.3 trillion dollars in assets under management. Many pension funds have failed to meet payout obligations as their investments have performed badly in recent years. As such, there has been an increased interest in alternative investments such as hedge funds.

While Al Saqer is open ended, the Fund Manager has determined that the maximum size of the fund will not exceed AED 3 billion.

Al Saqer’s hurdle rate, the rate of return it must out-perform to receive performance fess, will be the lesser of 10 percent or the 3 month Emirates Interbank Bank Offered Rate plus five percent. Ernst & Young are the Fund’s Auditors, Al Tamimi & Company the Legal Advisors.

No application has been made by the fund for the listing on any stock exchange, although the fund manager reserves the right to do so in the future if it is in the best interest of the Fund and its Unit Holders.

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