National Bank of Canada and BNP Paribas announced on Wednesday that they have formed a joint venture offering hedge fund managed accounts, a vehicle of choice for retail and institutional investors who wish to invest in hedge funds while controlling operational and market risks.

BNP Paribas has acquired a stake in Innocap Investment Management Inc., a subsidiary of National Bank of Canada, which specializes in hedge fund managed accounts. National Bank of Canada and BNP Paribas intend to make Innocap the leading provider of managed accounts for investors worldwide.

Innocap, which has been in operation since 1996, has developed a broad product offering that provides full transparency and security of investment management, key elements increasingly demanded by institutional investors. BNP Paribas brings to Innocap its unique structuring and commercial capacities, together with an international reach and breadth of distribution capabilities.

Innocap currently advises on over US$2 billion of assets. It provides active daily monitoring of alternative funds with complete transparency on the underlying positions and on the setting of adequate risk limits and investment guidelines. Additionally, it monitors operational risk, and advises on, along with third party service providers, all the key operations for the funds.

“I’m delighted by the creation of this partnership,” said Yann Gerardin, global head of BNP Paribas equities and derivatives. “Innocap offers a powerful platform with full-fledged high-tech risk monitoring, control, liquidity and transparency to investors. These capabilities will enable us to create a new generation of structured products, which we expect will have broad appeal to an international client base.”

This joint venture will allow BNP Paribas to strengthen its capabilities in structuring fund derivatives products, while completing its global alternative fund offering.

“With the participation of BNP Paribas, we are bringing Innocap’s world class offering to the world wide market,” said Ricardo Pascoe, co-president and co-CEO of National Bank Financial Group. “National Bank of Canada wants to be known as the premiere provider of all-inclusive risk management solutions in Canada and through this partnership, bring these types of solutions to the international market. Innocap has already attracted a great roster of fund managers, institutional investors in Canada and internationally, and a strong retail base. We are confident that Innocap will grow significantly in the years to come.”

“I am proud that Innocap is based on the values of transparency, security, openness and equality of service for all investors,” said Stephane Liot, global head of BNP Paribas fund derivatives. “Innocap is made up of seasoned and highly talented experts in the field of hedge fund selection and due diligence, risk monitoring and legal analysis, quantitative research and portfolio management.”

Martin Gagnon and Denis Parisien, co-CEOs of Innocap added: “BNP Paribas and National Bank of Canada are complementary, well-established institutions sharing the same business vision and ambition. We are confident in this joint venture and look forward to its success.”