By Lars Paulsson
Jan. 8 (Bloomberg) -- Energy Capital Management BV, an Amsterdam-based energy hedge-fund manager, plans to start trading French power this quarter and expand into the U.K. in the middle of the year as prices climb to records.
``Moving into the French and U.K. power markets will give us a complete picture of European energy commodities,'' Chief Executive Officer Marcel Melis said yesterday by telephone. Energy Capital Management trades for the MMT Energy Fund, which was launched in October 2006 after raising 42.5 million euros ($62.4 million).
Widening the fund's geographical coverage will provide more opportunities to trade price spreads between European markets, Melis said. Investors are attracted to energy because there is little correlation with asset classes such as stocks or bonds.
Melis and the four other members of his team trade German, Nordic, Dutch and Belgian Power, along with U.K. and Dutch natural gas, carbon emission allowances and coal derivatives. The fund started trading Brent and gasoil last quarter.
Energy Capital Management will have ``several vacancies'' early this year, according to its Web Site. Melis declined to provide further details on hiring plans.
``We had a good year,'' Melis said, without commenting further on last year's returns. The fund is targeting annual returns of 25 percent to 30 percent.
Growing Markets
European power prices are continuing a rally that began in 2005 amid rising fuel prices and the introduction of the European Union's emissions-trading program, designed to make electricity production from fossil fuels more expensive to reduce carbon dioxide emissions from generation.
Electricity for next year in France, Europe's second- biggest market after Germany, pared a record 64.30 euros a megawatt-hour today. U.K. power for delivery this summer rose to a record 53.65 pounds ($106) a megawatt-hour.
Trading of U.K. power contracts rose 52 percent in the year through July, according to the country's financial services authority. The value of the market was 31 billion pounds ($69 billion) in the period.
European continental power trading doubled in volumes, taking the value of the market to 285 billion euros, the authority said.
To contact the reporter on this story: Lars Paulsson in London at lpaulsson@bloomberg.net
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