RAB Capital Plc, the hedge fund whose assets under management dropped 86 percent, cut staff in Hong Kong for the second time since October to focus on its U.K.-managed funds, said two people familiar with the matter.
RAB scrapped a plan to start an Asian deep-value fund to invest in distressed assets and assets sold by cash-strapped investors in the region, the people said, declining to be identified as the information is private. Four members of a five-people team hired from DB Zwirn & Co. to run the planned fund left at the end of December, they added.
RAB is trimming jobs in Asia as part of a wider effort announced in September to cut costs to return to profitability as soon as possible. The London-based company warned of 2010 results “significantly below current market expectations” in a statement that month.
“We have taken action to reduce our cost base in Asia,” RAB said in an e-mailed statement on Jan. 13 in response to queries from Bloomberg. “We’re now focused on expanding our Asian investor base in our core products, several of which delivered very strong returns in 2010.”
Charlotte Kirkham, a London-based outside spokeswoman for RAB, declined to comment on the details of the job cuts.
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 the September statement. The latest round of cuts left four people in RAB’s only international office, including David Seex, chief executive officer of RAB Capital (Asia) Ltd., said the people.
RAB shares declined 29 percent in London trading last year.
RAB, founded by Philip Richards and Michael Alen-Buckley, is scaling back its Asian operations as international peers such as Soros Fund Management LLC, GLG Partners Inc., Moore Capital Management LLC and Viking Global Investors LP opened offices in Hong Kong, according to records of the city’s Securities and Futures Commission.
The December departures were the second batch in RAB’s Hong Kong office since October when five members of its Pi investment team left with the closure of RAB-Pi Asia Fund Ltd., the company’s remaining Asian fund.
The DB Zwirn team joined RAB’s Hong Kong office in 2009, one of the people said.
RAB is left with no Asia-focused fund and has no immediate plan to develop one with the recent departures, one of the people said.
The $230 million RAB Energy Fund Ltd. returned 50 percent in 2010, according to Kirkham. RAB also has a $50 million RAB European Credit Opportunities Fund Ltd., which returned 9.9 percent last year.
RAB also is starting UCITS funds, one of the people said. UCITS funds, short for Undertakings for Collective Investment in Transferable Securities, comply with European Union rules and have gained popularity as a way to invest in hedge funds with easier trading, transparency and increased regulatory scrutiny.
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 the asset manager opened its Hong Kong office.
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. Curbs on investor withdrawals from the fund will remain until Oct. 1, said Kirkham.
Pi ran two hedge funds and managed accounts for clients when RAB bought it in 2007, according to a RAB statement then.
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.