Mass Redemptions The End Of The Line For RAB?

May 11 2011 | 1:09pm ET

The end appears to have come swiftly for RAB Capital, once one of London's largest and best-performing hedge funds.

The firm said it would likely delist from London's Alternative Investment Market and "review the options for the company" after investors fled in droves in recent weeks. Among those options is the "use of the company's surplus capital to provide some liquidity to shareholders."

RAB has been battling for survival since 2008, when its flagship Special Situations fund lost more than 70%. Clients pulled US$370 million from the fund last month, when a three-year lockup expired, leaving the once US$2 billion fund with less than US$100 million and forcing RAB to restructure it as a natural resources-focused fund.

But the hasty retreat of Special Situations' remaining investors seems to have spooked investors in the firm's other funds, which have generally performed well. And that wave of redemptions has cut RAB's legs out from under it and led to the exit of one of its few remaining top managers, Gavin Wilson, who plans to leave the firm.

Wilson's Energy Fund was up 46% last year and 86% in 2009, and now likely faces a further wave of redemptions.

Other Special Situations collateral damage includes RAB's US$120 million Cross Europe fund, which has been "swamped by redemption requests," the Financial Times reports.


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