TPG-Axon Capital Management LP, the hedge fund led by former Goldman Sachs Group Inc. (GS) trader Dinakar Singh, is liquidating a London-based fund it merged with less than two years ago after facing client redemption requests.
The Montrica Global Opportunities Fund plans to return almost all money to clients by the end of this month, New York- based TPG-Axon said in a Feb. 24 letter to investors, which was obtained by Bloomberg News. Following the liquidation, TPG-Axon will have about $4 billion of assets under management.
Montrica’s board of directors is “unsure of the continuing logic of maintaining a separate, small Europe-focused fund and have reached the conclusion that it is in the best interests of investors to wind down the Montrica Fund,” the letter said.
An increasing number of money managers have shuttered hedge funds in recent months after Europe’s sovereign debt crisis roiled markets and prompted investors to reduce their holdings in the region. The number of funds liquidating in the second half of 2011 rose to 403 from 372 in the first six months of the year, according to Chicago-based Hedge Fund Research Inc.
Montrica follows a so-called event-driven strategy of investing in corporations likely to have price moves in their stocks because the companies are good targets for mergers, spinoffs or bankruptcies. TPG-Axon announced in August 2010 that Montrica would combine with the company, bringing the firms’ assets to about $9.1 billion.
Andrew Metcalfe, Svein Hogset and Fredrik Juntti founded Montrica in 2006 and raised about $1.1 billion from investors, making it the third-biggest new hedge fund in Europe that year, according to a survey published by EuroHedge magazine at the time. Metcalfe and Hogset worked at Goldman Sachs with Singh. Juntti previously worked at Citadel LLC, the Chicago-based hedge fund founded by Ken Griffin.
Metcalfe has left Montrica, said Daniel Gagnier, a spokesman for TPG-Axon. Hogset and Juntti plan to remain at the combined company and will manage money for the TPG-Axon global fund, Gagnier said.
Montrica Global Opportunities’s investment performance in 2011 was “roughly flat despite severe losses in European markets,” the letter to clients said. The fund gained about 4 percent in 2012 through Feb. 24, the letter said. Other event- driven hedge funds with a European focus fell 5.4 percent on average in 2011, according to Singapore-based data provider Eurekahedge Pte.
TPG-Axon won’t charge any management fees on the Montrica portfolio while it is liquidating the fund, according to the letter. The liquidation won’t affect Montrica assets held in so- called side pockets, the letter said. Hedge fund managers typically place hard-to-sell assets in side pockets to prevent having to divest them at depressed prices.
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