Blackstone-Backed Senrigan Fund Posts Smallest Drop in 3 Years

An Asia event-driven hedge fund managed by Blackstone Group LP-backed Senrigan Capital Group Ltd. lost 3.8 percent in 2013, the smallest annual drop in three years, according to a newsletter sent to investors.

The $310 million Senrigan Master Fund would have returned an estimated 14.3 percent had it side-pocketed a loss-making investment in Sundance Resources Ltd., according to the document. Suzi-Kay Jacoel, Hong Kong-based investor relations officer, also confirmed the numbers. Hedge funds have used side-pockets to separate harder-to-sell securities from more liquid investments.

Senrigan is trying to end a losing streak that began in 2011. The fund topped $1 billion in April that year, putting it among the biggest Asia-based hedge fund startups after the 2008 global financial crisis, before losses and redemption reduced its assets. Assets of the fund, which invests in securities affected by corporate events such as mergers and acquisitions, rebounded from just above $280 million in August.

The fund, which lost as much as 15 percent in the first eight months of 2013, has returned 17 percent between then and the end of last week, Jacoel said via telephone from New York.

Senrigan’s Japan-related investment returned 15 percent in 2013, it said in the newsletter. The fund gained 1.5 percent in December, having made money from three unidentified long-term holdings, according to the document.

“In each case, we anticipate seeing significant further upside in the coming year,” it said.

Sundance Bets

Hong Kong-based Senrigan is led by Nick Taylor, who oversaw more than $1 billion for Modal Capital Partners, a Credit Suisse Group AG hedge fund. He went on to head Citadel LLC’s principal investments business in Asia and Europe between July and December 2008.

Senrigan has lost money from the collapse of Sichuan Hanlong Group’s bid to take over Sundance. The deal broke after Liu Han, the billionaire chairman of closely held Hanlong, was reported by China’s Shanghai Securities News to have been unexpectedly detained with his wife in China in March 2013.

Hanlong, based in Chengdu, owns 14 percent of Sundance, according to data compiled by Bloomberg, and a purchase of the rest of Sundance would have given it control of the Mbalam iron ore project straddling the Republic of Congo and Cameroon.

Sundance’s shares plunged 48 percent in Sydney on April 9 after it scrapped the A$1.14 billion ($1 billion) deal with Hanlong as the latter was unable to secure funding for the acquisition. The stock plunged 74 percent in 2013.

Largest Investment

Senrigan started to buy Sundance shares in 2011 and the company was once one of its largest investments, said a person with knowledge of the matter in April last year. When Senrigan was started in 2009, its offer document excluded the ability of setting up side-pockets, Jacoel said.

Sundance said on Dec. 19 that it was continuing talks with groups regarding the sale of equity and take-or-pay iron ore off-take agreements that cover full production capacity from Mbarga and Nabeba mines.

In October, it said it signed legally binding agreements to raise A$40 million through the issue of convertible notes and options to Noble Resources International Pte and an investor group including Blackstone, D.E. Shaw Group and Senrigan.

The Eurekahedge Asia Event-Driven Hedge Fund Index returned an estimated 22 percent last year, with 71 percent of the 14 funds tracked by the Singapore-based data provider having reported December data.

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