Hedge fund Tisbury Capital is poised to shrink by more than half after waiving a 10% withdrawal cap.

Investors in the US$2 billion London merger arbitrage shop have made US$1.4 billion in redemption requests. Rather than restrict or freeze redemptions, the five-year-old firm has decided to allow investors to get 85% of their money back on Tuesday—its next redemption date—in exchange for allowing it to unwind its more illiquid positions over a longer period, the Financial Times reports.

The newspaper says Tisbury hopes to continue operating with its vastly reduced asset base, possibly pursuing a sale to a larger manager. Preliminary sale talks with GLG Partners earlier this year came to nothing.

Tisbury has suffered from weak performance, and earlier this year shuttered an ill-fated U.S. expansion.

The redeeming investors’ share of some US$300 million in illiquid assets are to be put into a new share class, allowing the firm to avoid a fire sale of the holdings. While the illiquid portfolio includes credit assets, it holds very little in the way of structured credit, and is not highly levered.