INVESTMENT TERMS
Current Est. Fund Assets: Inception: Min. Invst: Redemption: Additions: Lock-Up: Domicile: Mgmt. Fee: Performance Fee: USD 380,000,000 December 2006 USD 5,000,000 Quarterly (60 Bus. Days notice) USD 1,000,000 4pct penalty for first 12months Cayman Islands 2% 20% with High Water Mark
Core focus on market neutral trading strategies, integrated risk management, and investment in securities requiring both deep
credit analysis and sophisticated credit derivatives capabilities.
PORTFOLIO MANAGER
Asteri Capital Ltd (Asteri) is the successor business to Glencore Finance AG the proprietary credit trading business of
Glencore International AG, investing since 2003.
We invest mainly in obligations of leading U.S. and European corporations, in the form of loans, bonds, and credit derivatives.
We use credit structures to provide maximum income and flexibility to our investors. We hedge against market risk using liquid instruments such as credit indices and options. A small part of our portfolio is devoted to convertible bonds, prime lending, and other assets.
The principals of the business have worked together to build an integrated, multiple strategy, trading and investment business.
The integrated team members have traded together and produced consistent returns since 2005.
* Returns relating to previous proprietary trading returns prior to Asteri Fund Launch in December 2006.
PERFORMANCE ANALYSIS
AUM and Return Volatility
2007 Opening AUM (US$mm) Annualised 12Mnth Rolling Return Volatility 12 Mnth Rolling Sharpe Ratio
Jul 380**
Aug
Sep
Oct
Nov
Dec
2007 (Net) Struct. Credit Cash CDOs Relative Value Volatility Convertibles Leverage Loans EM Strategy Total
Jul
Aug
Sep
Oct
Nov
Dec
Registered Office: 50 Berkeley Street London W1J 8HD England Telephone +44 (0) 20 7629 3800 Fax +44 (0) 20 7499 3569 Email investor.relations@astericapital.com
Registered in England No. 5476483 Authorised and regulated by the Financial Services Authority
Leveraged buyouts are changing the composition of the high yield market. Todays wave of LBOs embodies cautious
application of leverage to established companies with stable and predictable cash flows, in sharp contrast to prior waves of leverage. This year is expected to see $200 billion of issuance of high-yield paper from LBOs, mostly from established firms with very low near-term default probability.
We take long positions where default risk is overcompensated in loans, bonds, and credit derivatives of established and secure
companies that borrow to finance LBOs. We take short positions in overpriced liquid instruments.
We exploit the steep credit spread curve and the low near-term default rate, through structures that pay the five-year credit spread
but are callable in two years. In effect, we put our investors money at risk for only two years, but earn the generous risk compensation for five-year maturities. Innovations such as the hybrid cash-flow synthetic CLO allow us to mine the cheapest parts of the credit market. We choose every credit in the portfolio and control the entire structure. That gives our investors an optimal combination of income and flexibility.
The global carry trade has compressed credit spreads in the liquid traded credit indices. We use liquid indices, credit and equity
options, and other assets to neutralize the market risk in our portfolio.
We are not locked in to credits. We can employ credit derivatives rather than outright bonds or loans to increase our flexibility.
Our credit structures can be unwound in two years, permitting us to exit investments long before potential credit problems might manifest themselves.
As an offshore fund, we do not have the regulatory constraints that affect bank risk management, and can use a much wider range
of techniques to neutralize portfolio market risk.
We operate with far less overhead than banks and can pay out far higher dividends to our investors.
The Great Value Shift in High Yield
USD B Rated as of: 6 Mar 2007 450 400
Normal downward-sloping
Spread to LIBOR
Abnormal upward-sloping
3 Maturity
Registered Office: 50 Berkeley Street London W1J 8HD England Telephone +44 (0) 20 7629 3800 Fax +44 (0) 20 7499 3569 Email investor.relations@astericapital.com
Registered in England No. 5476483 Authorised and regulated by the Financial Services Authority
Scenario Analysis: Overlap between risks in separate books stress-tested and managed. (For example, rises in volatility are often
correlated with both declines in overall market levels as well as declines in junior tranche prices)
Convertibles Emerging Markets Structured Credit Cash CDOs Prime Lending Leveraged Loans Rel Val High Yield Volatility
Volatility Convertibles 0.09% 11.61% Emerging Markets 0.16% Structured Credit 11.22%
Registered Office: 50 Berkeley Street London W1J 8HD England Telephone +44 (0) 20 7629 3800 Fax +44 (0) 20 7499 3569 Email investor.relations@astericapital.com
Registered in England No. 5476483 Authorised and regulated by the Financial Services Authority
DISCLAIMER
This document has been prepared by Asteri Capital Ltd solely for the information of the person to whom it has been delivered. The information contained herein is strictly confidential and is only for the use of the person to whom it is sent. The information contained herein may not be reproduced, distributed or published by any recipient for any purpose without the prior written consent of Asteri Capital Ltd. Notwithstanding anything to the contrary herein, such person (and each employee, representative or other agent of such person) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of (i) the Fund and (ii) any of its transactions, and all materials of any kind (including opinions or other tax analyses) that are provided to the recipient relating to such tax treatment and tax structure. The distribution of this document may be restricted in certain jurisdictions. The information herein is for general guidance only, and it is the responsibility of any person or persons in possession of this document to inform themselves of, and to observe, all applicable laws and regulations of any relevant jurisdiction. Glencore Finance AG is the proprietary credit trading business of Glencore International AG. This document relates to Asteri Capital Ltd which manages the investment of the assets of the funds pursuing substantially the same strategies as Glencore Finance AG and which will be seeded by Glencore. At the date of this document, Asteri Capital Ltd is incorporated in England and Wales and is Authorised and Regulated by the UK Financial Services Authority. The summary description of the proposed strategy included herein and any other materials provided to you are intended only for information purposes and convenient reference. This information is not intended to provide and should not be relied upon for accounting, legal or tax advice or investment recommendations. You should consult your tax, legal, accounting or other advisors about the issues discussed herein. The descriptions contained herein are a summary of certain proposed terms and are not intended to be complete. Material terms of the Fund are subject to change. Any prospective investor will be provided with a copy of the Fund's offering memorandum and an opportunity to review the documentation relating to the offering. Prospective investors should review the offering memorandum, including the risk factors in the offering memorandum, before making a decision to invest. In addition, prospective investors should rely only on the offering memorandum in making a decision to invest, although certain descriptions contained herein may be more detailed than those contained in the offering memorandum. This document is not intended as an offer or solicitation with respect to the purchase or sale of any security. This document is not intended for distribution to, or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. In particular this document is not intended for distribution in the United States or for the account of U.S. persons (as defined in Regulation S under the United States Securities Act of 1933, as amended (the "Securities Act")) except to persons who are "qualified purchasers" (as defined in the United States Investment Company Act of 1940, as amended) and "accredited investors" (as defined in Rule 501(a) under the Securities Act). Asteri Capital Ltd is not hereby providing advice as to the merits or otherwise of any investment and is not hereby arranging or agreeing to arrange any transaction in any investment whatsoever or otherwise undertaking any regulated activity. Any subscription may only be made on the terms of the offering memorandum and subject to completion of a subscription agreement. The Fund will not be registered under the Securities Act or the securities laws of any of the states of the United States and interests therein may not be offered, sold or delivered directly or indirectly into the United States, or to or for the account or benefit of any US person, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of such securities laws. The securities will be subject to restrictions on transferability and resale. The Fund will not be registered under the Company Act. Asteri Capital Ltd is not registered as an investment adviser under the United States Investment Advisers Act of 1940. No reliance may be placed for any purpose on the information and opinions contained in this document or their accuracy or completeness. No representation, warranty or undertaking, express or implied, is given as to the accuracy or completeness of the information or opinions contained in this document by any of Asteri Capital Ltd, its members, employees or affiliates and no liability is accepted by such persons for the accuracy or completeness of any such information or opinions, and nothing contained herein shall be relied upon as a promise or representation whether as to past or future performance.
Registered Office: 50 Berkeley Street London W1J 8HD England Telephone +44 (0) 20 7629 3800 Fax +44 (0) 20 7499 3569 Email investor.relations@astericapital.com
Registered in England No. 5476483 Authorised and regulated by the Financial Services Authority