RAB Capital Plc, the London-based hedge-fund manager founded by Philip Richards and Michael Alen-Buckley, has shut its remaining Asia-focused fund, said five people with knowledge of the matter.
Five members of the Hong Kong-based Pi investment team, including its three founding partners Alain Barbezat, Caesar Luk and Nissim Tse, left RAB about two weeks ago, said the people, who declined to be identified as the information is private.
Hedge funds are struggling to raise capital or regain assets lost during the financial crisis as fundraising from institutions has become tougher. As much as 20 percent of hedge funds may be liquidated by the first quarter of 2011 as they’re starved of fee revenue and money, Justin Fredericks, head of U.S. capital introductions on the prime brokerage team of Bank of America Corp.’s Merrill Lynch & Co. unit in New York, said in September.
“The environment remains challenging for new and smaller-sized funds to raise assets,” said Alexander Kalis, a managing partner of London-based Think Alternative Advisors LLP, which provides research and consultancy services on Asian funds. “Firms which are struggling may consider ridding themselves of their peripheral businesses if they are unable to contribute to the bottomline.”
RAB decided to pull the plug on the Pi fund because its revenue could no longer offset costs after losing assets, two of the people said. The Pi team oversaw less than $35 million in the Asia fund when it closed, they added.
RAB warned its financial results this year could be “significantly below current market expectations” in a Sept. 16 statement and said it started measures to cut costs to return to profitability. RAB’s London-quoted shares lost 26 percent this year.
Assets Under Management
The closure of RAB-Pi Asia Fund Ltd. leaves RAB, which opened its first overseas office in Hong Kong in 2007, with no Asia-focused fund at present, said the people. Charlotte Kirkham, an external spokeswoman for RAB in London, declined to comment. Luk and Tse declined to comment. Barbezat couldn’t immediately be reached.
RAB planned to double its Asian assets to $2 billion within a year, Rod Barker, RAB’s director of business development and distribution, said in an interview in October 2007, when RAB opened its Hong Kong office.
RAB’s assets under management fell to $1.05 billion by Aug. 31 from the end of 2007 peak of $7.2 billion, according to company statements. Richards’s RAB Special Situations Fund, the firm’s largest, slumped 73 percent in 2008, hurt by a bet on Northern Rock Plc, the first British bank nationalized during the credit crisis.
The Pi team was the second Asian business to depart from RAB. George Philips and David Rogers, principals of Northwest Investment Management Ltd. which was acquired by RAB in 2006, bought back the now Hong Kong-based hedge-fund manager in April last year, according to a RAB statement then.
Barbezat, Luk and Tse set up Pi Investment Management Ltd. in 2002. Pi managed $209 million in September 2007 in two hedge funds and managed accounts for clients when RAB bought it in cash and shares then valued as much as 10.5 million pounds ($17 million), according to an October 2007 statement.
The Pi team’s departure came after the September expiry of a three-year lockup period on their employment, a condition for the shares issued as part of the acquisition, said two of the people.
RAB still employs a team of ex-DB Zwirn & Co. employees who are preparing the start of a special situations fund investing in debt and equities of distressed companies in the region, the two people said. The five-member team is already advising clients on such deals, one said.