Stark Plans Auction For Illiquid Investment Stakes

Oct 27 2010 | 1:20pm ET

Stark Investments is giving its investors a way out of its $1 billion in illiquid investments.

The St. Francis, Wisc.-based firm told investors last week that it would conduct an auction for shares of its Stark Select special-purpose vehicle, Hedge Fund Alert reports. The firm set up Select after suspending redemptions from its flagship in 2008 and restructuring the fund. Select holds real estate, reinsurance and Asian credit investments.

Credit Suisse will conduct the three-part auction, which begins with interested parties making their bids for the Select shares until Nov. 23. Stark investors will then have from Nov. 30 until Dec. 7 to tell Credit Suisse how much they're willing to accept for their shares. On Dec. 17, Credit Suisse will announced a final clearing price designed to maximize trading volume.

Credit Suisse has been doing good business running such auctions over the past two years, having previously helped Camulous Capital, GoldenTree Asset Management, Ospraie Management, Plainfield Asset Management and RAB Capital shareholders, among others, get rid of investments they no longer want, generally at a discount of between 20% and 30% of net asset value.

Stark has already liquidated 75% of Select's assets and says it will sell off another $150 million in assets by the end of the year. The firm said it hopes to completely liquidate the vehicle by 2013, returning assets on a quarterly basis to investors.

Stark is in the midst of something of a rebuilding: Late last year, the firm's Asia business spun off as Orchard Capital Partners. In March, it lost its head of sales for Europe, Asia and the Middle East, and in June bid farewell to five of its 15 partners, including its president and the heads of its European business.

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