RAB Capital Plc (RAB) founders Philip Richards and Michael Alen-Buckley will invest $30 million of their own money in the company’s biggest hedge fund so it doesn’t have to separate illiquid assets from other holdings.
The investment increases the founders’ total allocation to the RAB Special Situations Fund to $40 million, the London-based company said in a statement today. The investment means the fund’s board of directors won’t have to move hard-to-sell holdings into a so-called side pocket, an account hedge funds use to separate assets. Clients typically can’t get their money back from such accounts until investments are sold.
RAB Capital decided in June to delist its shares from the London Stock Exchange after investors flooded the company with requests to pull money. The company’s turmoil started in 2008, when the Special Situations fund slumped 73 percent after making a money-losing investment in Northern Rock Plc and buying an illiquid stake in a motor-racing franchise.
RAB Capital said in April investors had made requests to withdraw 76 percent of assets in the Special Situations fund, leaving it with less than $100 million. The fund managed as much as $2.3 billion in 2007.
The Special Situations fund will have about 90 holdings at the beginning of October, according to the statement. About 40 percent of the portfolio’s value will be direct investments in companies that aren’t listed on exchanges, a total that will decline as illiquid assets are sold. In the future, the Special Situations fund will only invest in publicly traded companies within the energy industry, RAB Capital said in the statement.
Richards and Alen-Buckley founded RAB Capital in 1999 and the company sold shares to the public in 2004.
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