Hedge Fund Ritchie Capital Management, as part of a liquidation plan, is selling a significant portion of its assets in its Multi-Strategy Fund for $1 billion to New York City-based Reservoir Capital Group.
Ritchie Capital, which oversees about $2.8 billion including borrowed money, will liquidate its Multistrategy Global Fund and return cash to investors. The company told investors that the Ritchie Capital Management flagship multi-strategy hedge fund had about $730 million in assets in mid-2006.
Thane Ritchie, founder of Ritchie Capital said in a statement, "We are pleased that investors have approved this transaction as it is a significant first step in meeting our stated objectives for the Multi-Strategy Fund - preserving the value of its assets and returning capital to redeeming investors,.....However, we recognize that we need to continue to work diligently and intelligently to completely fulfill our commitment to all our investors."
After facing an extended period of under performance and investor demands for capital returns, the hedge fund has been in exclusive talks with Reservoir and Coller for several months to buy the flagship fund, sources have said. The sale is the first of what Ritchie Capital Management expects will be a series of transactions for the remainder of the fund’s assets. At the end of 2004, Ritchie lost more than 2% of its flagship fund and decided to alter it to a traditional, more liquid one to one that incorporates private equity and longer-term investments.
The deal with Reservoir has been approved by Ritchie investors launching a new fund called Rhone Holdings, L.P., which will purchase the assets in part with capital invested by Reservoir funds. Ritchie will manage this new entity, the firm explained in a statement.
Reservoir Capital is a private investment firm with about $3 billion under management. Ritchie Capital Management is headquartered in Geneva, Illinois with offices in New York, Chicago, London, Bermuda, Hong Kong, and Menlo Park, California.