Former Soros Fund Management LLC trader John Zwaanstra plans to return outside capital in Penta Investment Advisers Ltd., the Asia-focused hedge fund he set up in 1998, said two people with knowledge of the matter.
The company plans to give investors more details this week, said the people, who asked not to be identified.
Penta managed as much as $2.9 billion in mid-2011, about 40 percent of which came from Penta principals, said another person. Its assets have fallen below $2 billion, said one of the people familiar with the plan to return investors’ money.
Zwaanstra and John Pridjian, chief financial officer of Penta Investment Advisers, didn’t reply to Bloomberg e-mails. Zwaanstra’s younger brother Todd, who works as a trader at its Hong Kong unit Old Peak Ltd., declined to comment, citing a company policy of not talking to the press.
Eurekahedge Asian Hedge Fund Index (EHFI38) dropped 8.3 percent last year, the second-worst annual loss since the Singapore-based data provider began keeping records in 2000, according to preliminary data. Its global hedge fund index (EHFI251) declined 4 percent.
“An increasing number of Asia’s best investors are quietly closing down their public funds in favor of a lower-profile approach to investing,” Peter Douglas, principal of Singapore- based advisory and wealth-management firm GFIA Pte, said an e- mail. “Excessive regulation and the increasing demands of institutional investors are among the main drivers to ‘go underground’ and continue investing in an unconstrained and focused fashion.”
About 123 Asian hedge funds closed in the first 10 months of 2011, almost the same as for the entire 2010, as performance faltered and managers struggled to raise capital, according to Eurekahedge.
Boyer Allan Investment Management LLP, another Asia-focused manager set up in 1998, told investors last month that it will liquidate most of its funds, a person with knowledge of the matter said then. Its flagship Pacific Fund (BLAP0A1) returned more than 15 percent a year on average in its 13-year history yet reported annual losses in 2008 and 2011.
Zwaanstra set up Penta after a three-year stint with Soros Fund Management, raising more than $500 million initially. He joined Jardine Fleming Holdings Ltd. in Tokyo after graduating from Harvard University in 1988.
Penta once ran the largest Japan hedge fund which returned more than 155 percent in 1999 before falling 47 percent the following year.
The manager froze redemptions from its then $650 million Japan hedge fund in December 2000 for two months, saying limited trading in shares of small Japanese companies and high-yield bonds made it unable to sell securities to meet withdrawals without hurting remaining investors.
In 2003, Zwaanstra returned more than half of the assets under management in the $900 million fund when trading volume fell on Japanese markets, London’s Financial Times reported then.
Soros Fund Management, Zwaanstra’s former employer, decided in July to return outside capital and focus on running assets for George Soros and his family who made up the bulk of its then $25.5 billion assets to avoid having to register with the Securities and Exchange Commission by March 2012.
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