FrontPoint Sells Credit Hedge Fund To MatlinPatterson

Aug 22 2011 | 2:09pm ET

The slimmed-down FrontPoint Partners is getting even svelter.

FrontPoint, which earlier this year shut down all but four of its hedge funds in the wake of an insider-trading scandal, has agreed to sell one of those four to private equity firm MatlinPatterson. The Greenwich, Conn.-based firm will transfer the management of its three-year-old Strategic Credit Fund, and that fund's management team, to MatlinPatterson on Oct. 1.

Strategic Credit's managers, Noelle Savarese and Marc Rosenthal, informed clients of the plan about a month ago. The two will continue to run the fund, which is expected to bring between $150 million and $180 million to MatlinPatterson, The Wall Street Journal reports. The fund had managed about $500 million earlier this year before a wave of redemptions in the wake of the implication, arrest and guilty plea of Joseph Skowron, the firm's former healthcare hedge fund chief, on insider-trading charges.

FrontPoint will be left with only about $1 billion in assets after the credit team leaves. Almost all of that money is in its FrontPoint-SJC Direct Lending Fund, which debuted in January and has a six-year lockup.

At its peak, FrontPoint managed $10 billion. The hedge fund spun-off from Morgan Stanley in March, more than four years after the investment bank bought the firm.


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