Commodity asset manager Diapason sees strong demand for high-end polished diamonds and is aiming to raise between $150 million and $400 million in a new closed-end fund invested in the gemstones that will be listed on London's main market.
The proposed listing of British investment company Diamond Circle Capital Plc on July 10 reflects shifting tastes by the growing army of wealthy individuals towards alternative investments in which returns are not directly linked to financial markets.
Diapason Commodities Management, which will manage the closed-end fund, believes that firming demand and tight stockpiles will drive polished diamond prices higher, said Sean Corrigan, Diapason's chief investment strategist.
The fund, believed to be the first of its kind invested in polished diamonds, will invest in a diversified portfolio of the stones, both colourless and coloured, each worth at least $1 million.
The diamonds, which will be bought at auctions and from producers, brokers and wealthy individuals, will be kept amid the highest levels of security in the bank vault at UBS in Geneva, Corrigan said. UBS is bookrunner for the IPO. The fund is expected to see a turnover of 15-20 percent of its portfolio each year, Corrigan said.
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