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14 Dec 2006

Ritchie sells Hedge Fund to Refund Investors

Ritchie Capital Management Ltd. has "decided to terminate the restructuring and effect an orderly disposition of the assets,'' of its flagship hedge fund, the Multistrategy Global Fund.

After consulting with investors, an email was sent to Ritchie's clients revealing their negotiations with an undisclosed buyer for the assets of the hedge fund, and the plan to return the cash to investors. Ritchie Capital has been struggling the past two years with returns that were below average, the fund suffered last year from losing energy bets.

Thane Ritchie, the founder of the company, had previously planned to refund 80% of clients' money over the next 2 1/2 years and keep the fund open for at least three years. The fund, which invests in everything from bonds to energy, lost more than 2% through August from the start of 2005. That compared with an average gain of 14% for competing funds, according to data compiled by Hedge Fund Research Inc. in Chicago.

The sale does not include the mostly private-equity investments that the firm separated into a so-called side pocket last year. Those holdings accounted for about 20% of the fund. The deal would be structured so that Ritchie Capital will continue to manage the assets, Doug Rothschild, the firm's chief administrative officer, said in an interview with Bloomberg. Based in Geneva, Illinois, Richie capital oversees about $2.8 billion including borrowed money.