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Situation:
The Fund and the GP have a disproportionate exposure to one public company, after an IPO.
Solution:
Traditional hedge instruments such as puts and floors tend to be unsuitable for hedging a fund's exposure to the variations of stock prices after an IPO, often because the small float, and the large exposure to be hedged make the hedge too costly to make economic sense.
We work with GPs to better define the hedge strategy, and propose alternative hedging strategies, which would offer a sufficient coverage, at a reasonable cost.
