In an unusual move for a hedge fund, Danfonds Aps has signed a Letter of Engagement (dated June 19th 2008) to enter into an outsourcing agreement for analytical work on frontier market equities. The engagement, negotiated with Capgemini Consulting India Pvt. Ltd. includes the supply of services, investment analytics and project work to Danfonds Aps and its subsidiary Danfonds Investment Management (Cayman) Limited in respect of the Danfonds Frontier Funds SPC.
The outsourcing arrangement shall commence from the date that Danfonds Frontier Funds SPC, Frontier Markets Liquid Class B shares, are listed on the Irish stock exchange in accordance with the Offering Memorandum provisionally dated September 2008. The contract shall, in the first instance, be valid till August 2010.
The arrangement allows us to make investment decisions faster and more accurately. The alpha in frontier markets comes from selecting the right countries to invest in as well as by an informational advantage and bottom up investment decisions. This is not a case of outsourcing alpha but of improving our ability to make those decisions.