Hedge Fund Side-Pocket Liquidator Hired By Bank

Nov 1 2012 | 12:42pm ET

A firm that specializes in the liquidation of hedge fund side-pockets and other so-called "toxic assets" has a potentially lucrative new client base.

Multiplicity Partners, founded three years ago to advise on the wind-down of illiquid assets, has signed its first bank. The new client was unidentified, although Zürich-based Multiplicity said it was a major continental bank.

Multiplicity is charged with valuing and selling off US$45 million worth of side-pockets for the bank, Financial News reports. The unwanted assets are in emerging market and structured credit strategies.

Until now, Multiplicty has worked primarily for institutional investors, private banks and funds of hedge funds. All told, it has wound down US$2 billion in assets, one-fifth of which were illiquid.

"The big elephant in the room that has not been addressed is that banks are holding large portfolios of illiquid assets," Multiplicity partner Andres Hefti told FN. "Although banks are reluctant to mark down the value of these positions, one day they will realize that they can no longer justify the value with their auditors, who need to independently verify them."

"This mandate is a result of extended discussions with the bank on regulatory capital requirements, valuation practices and the complexities of the secondary market," Roger Rüegg added in a statement.


In Depth

David Yarrow On Growing His Hedge Fund And Shooting The Animals And People Of Africa - As A Photographer

Jul 23 2014 | 6:44am ET

While he’s always been a photographer, recent expeditions to Iceland, Ethiopia...

Lifestyle

Einhorns Busts At WSOP, Finishes In 173rd

Jul 15 2014 | 10:48am ET

Greenlight Capital founder David Einhorn’s World Series of Poker won’t end at...

Guest Contributor

Common Risk Parity Misperceptions

Jul 16 2014 | 11:02am ET

Over the past few years, risk parity has become a component of most investors’...

 

Sponsored Content

    Northern Trust Helps Hedge Funds Navigate Derivatives Regulations

    Jul 8 2014 | 10:48am ET

    The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…

Publisher's Note