- Myo plans to liquidate private credit fund by first half
- Founders are looking for larger asset manager for new venture
Myo Capital Advisers, which focuses on making private loans and distressed credit investments in the Asia-Pacific region, is shutting its nearly eight-year-old hedge fund after a big investor decided to pull its money.
Myo is now looking to form a venture with a larger asset manager for private credit investments in Asia, the Hong Kong-based firm co-founded by former executives of ADM Capital and HSBC Holdings Plc said in its December newsletter to investors. The hedge fund had about $10 million of assets before the redemption request, Chief Executive Officer Justin Ferrier wrote in an e-mail, without naming the investor.
The backer, whose investment is described as "relatively large", decided to withdraw its money because of its own need for cash and its redemption wasn’t related the fund’s performance, according to the newsletter. The fund returned 24 percent last year and nearly 12 percent on an annualized basis since its April 2008 inception, according to the document and Ferrier. Myo expects to liquidate investments by the first half of this year.
Myo joins a number of smaller hedge funds that have been shuttering as big institutions that have dominated inflows into the global industry since the 2008 global financial crisis have favored large, established managers. Smaller funds have also had to cope with rising business costs amid tightening regulations.
"It has been a fantastic experience to start Myo Capital and build a successful track record,” Ferrier said in the newsletter. "However, I have to face up to the fact that it is increasingly difficult for small firms, such as ours, to raise significant amount of capital.”
Hedge fund liquidations climbed to 257 in the third quarter, the most since the first three months of 2014, according to Chicago-based Hedge Fund Research Inc. Octagon Capital Management, based in Singapore, decided to return all client money in its two funds and convert into a family office this year. About 75 percent of the 294 European funds that shut down last year managed $150 million or less, according to Singapore-based data provider Eurekahedge Pte.
Managers can generate significant out-performance in Asian private credit investments as post-2008 regulations has "caused banks to deleverage and investment banks to exit special situation investing,” Ferrier said in the newsletter.
"Asian markets are inefficient with multiple markets all in different stages of their business and credit cycles,” he wrote. "Each market has different participants and jurisdictional regimes and this creates situations which are often mispriced."