RAB Capital investors back flagship strategy
Investors in the flagship investment strategy of London's RAB Capital have agreed to commit their money to the portfolio for three years, the hedge fund revealed today, as it announced a spin-off of its Asian operations into a separate legal entity.
In a rare move for the hedge fund industry, investors in two funds feeding into the $790m (€551m) Special Situations strategy were balloted, and agreed "by a considerable margin", to leave their money in the strategy, in return for a cut in the fees they pay.
Investors' willingness to commit their funds despite a decline of about 57% in the strategy's value so far this year forestalls a second ballot on liquidating it, which would have been triggered had the lock-in been rejected.
Small mining companies with shares on London's junior Alternative Investment Market expressed relief that the fund, which has been one of their major investors under its manager and RAB Capital's co-founder Philip Richards, was saved from possible closure.
Falkland Oil & Gas, the £76m exploration company in which Special Situations holds "a significant interest" issued a statement saying it "welcomes the announcement, which ends a period of uncertainty regarding the interest in Falkland Oil & Gas of RAB, which has been a long and supportive shareholder".
In separate news RAB Capital is taking a leaf out of the business structure of its larger peer Man Group by segmenting its portfolios under distinct product lines. Consequently RAB will rebrand the Northwest franchise of six hedge funds it bought in 2006 as Newco, and spin it off into an entity regulated separately from RAB Capital, although RAB will retain a 51% controlling interest in the new entity.
Newco, whose staff are split between London and Hong Kong, will be managed by George Philips and David Rogers, Northwest's founders, who will own 49% of the entity. Northwest runs six hedge fund portfolios including ones focused on China and Japan. In total its funds hold about 15% of RAB Capital's total assets.
The markets reacted disinterestedly to RAB's news by 10:00 GMT, leaving shares in the AIM-listed manager at 19.5p, where they rested at market's close yesterday. This year its shares have fallen by 77%.
--write to dwalker@efinancialnews.com
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