Avenue Lays Off 16, Adds Direct-Lending

Oct 5 2012 | 2:08pm ET

Avenue Capital Group is growing and shrinking.

The New York-based hedge fund will lay off 16 people following a review by a consulting firm. Two of the terminated are members of the investment team, while the rest come from its back-office and administrative staff.

But Avenue is also adding a business line, direct lending, and the hedge fund said it was likely to make hires in other areas, Reuters reports.

"Earlier this year we retained a consulting firm to conduct a review that was recently completed," firm founders Marc Lasry and Sonia Gardner wrote. "One outcome of this process is that we are reducing Avenue's global workforce by approximately 6.5%."

The founders also said Avenue would become the latest hedge fund to try to profit from banks' increasing reluctance to offer financing to smaller companies.

"We have recently added a senior member to the Avenue team to establish a direct-lending business and expect to bring on additional professionals as this new business scales up," they wrote.

Lasry and Gardner added that Avenue has bounced back from a double-digit loss last year with "double-digit returns" this year.

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