UPDATE 2-UK’s RAB Capital closes funds, shares rise

LONDON, Nov 14 (Thomson IM) – British listed hedge fund manager RAB Capital Plc said it planned to close several funds and reported a sharp drop in assets under management, blaming ‘unprecedented deterioration’ in the financial system.

RAB shares were up 21 percent at 7.9 pence by 0915 GMT, bolstered by hopes the fund closures are a sign the group is abandoning efforts to diversify in order to focus on its core strengths.

‘The feeling is that the diversification strategy is to be curtailed. It looks like they’re giving up on the attempt to build a major hedge fund business,’ said an analyst.

The funds earmarked for closure include three of RAB’s five fund of funds and an unspecified number of hedge funds which were too small to survive in current market conditions, the company said in a statement on Friday.

RAB is also closing three regulated funds as part of a decision to abandon its goal of building up a retail hedge fund business, it said.

‘These steps will result in a more focused product range in three areas of proven expertise and distribution capability,’ RAB said.


RAB also said withdrawals by clients and investment losses had reduced its assets under management to $2.8 billion by Nov.1 from $4.2 billion on Sept. 25.

The fund closures and further anticipated withdrawals look set to cut assets under management further to $2 billion by the end of the year, the company added.

‘Since the summer there has been an unprecedented deterioration in the state of the global financial system,’ RAB said.

‘The alternative asset management industry is under severe stress, with private and institutional investors deleveraging and the availability of financing significantly reduced.’

The fund closures follow a restructuring of RAB’s flagship Special Situations strategy in September, under which investors agreed to lock in their money for three years in return for steep cuts in RAB’s fees.

(Reporting by Myles Neligan; editing by Simon Jessop) Keywords: RABCAPITAL/