By James Mackintosh

Absolute Capital Management took over an Aim-listed property fund as the Mallorca-based hedge fund manager said it was doing better than expected in performance and in asset-raising.

Absolute, itself Aim-listed, paid €12.5m (£8.5m) for a contract to run the North Real Estate Opportunities Fund. It said it also planned to raise a further €100m to €200m for the fund to start its own property hedge fund.

Shares in Absolute rose 55p, or nearly 12 per cent, to 529p after the acquisition and an upbeat trading statement.

Sean Ewing, chief executive, said assets under management had nearly doubled to €3.1bn in the first six months of the year. It expected after-tax profit to be about €30m, on turnover of €58m.

Last year in the same period it made €11.4m after tax. It bought Argo Capital, a hedge fund specialising in credit, in January, so the numbers were not directly comparable.

With the listed property fund Absolute hired Magnus Lofgren and Robert Provine from North, a hedge fund manager, to run a new property division to specialise in eastern Europe. The listed North fund – that Absolute intends to rename – invests in Moldova, Ukraine and Romania.

Mr Ewing said the company already had a pipeline of property deals in the region in which it could invest money raised. It might be able to carry out a small fundraising exercise before the summer slowdown, with a bigger share issue in September.

He said emerging markets in eastern Europe provided a good property opportunity. They were fast growing and had lower interest rates, compared with the slowing developed markets, where interest rates have been rising.

That difference could also underpin the long-short positions in the property hedge fund; the latest in a drive by hedge funds into the property sector. “We see this as an attractive area for sure,” Mr Ewing said.

The company considers further expansion, he said, with the possibility of private equity or currency funds providing a “fourth leg” for its property, equity and debt businesses.

Copyright Fund China 2009.

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