AbCap Posts Loss, Closes Fund And Office

Jul 23 2008 | 9:36am ET

Battered by poor performance and a big annual loss, and facing as much as €500 million (US$794.5 million) in redemptions, troubled hedge fund Absolute Capital Management has closed one of its hedge funds and one of its offices.

The troubled Swiss hedge fund has closed its office in Mallorca, Spain, as it continues to try to bounce back from the surprise exit of co-founder Florian Homm in September and the spin-off of its most successful unit. The firm belatedly reported a €32.9 million (US$52.3 million) loss for 2007 yesterday, as Homm’s former funds, Octane and European Catalyst, posted losses of 25.8% and 24.3%, respectively.

AbCap also took a €74.1 million (US$117.4 million) writedown on the acquisition of Argo Capital Management, which it bought in last January and spun-off last month. In 2006, AbCap, which is listed on London’s Alternative Investment Market, turned a €27.6 million (US$43.9 million).

An independent investigation led by PricewaterhouseCoopers and law firm and Berwin, Leighton Paisner commissioned by AbCap is expected to by completed this summer, several months late.

Despite all the bad news, AbCap’s leaders say there is reason for optimism.

“There’s a business here,” new CEO Glenn Kennedy said. “In spite of what happened with Florian, there are still a number of very loyal investors in the group.”

“From January to June, performance has been okay,” Jonathan Treacher, chairman, said. “We haven’t been trying to shoot the lights out. We’ve bee trying to stabilize the business and focusing on assets.”

With the release of its annual report, AbCap shares on the AIM resumed trading. It was suspended at the beginning of the month when the firm delayed the publication of the report and its audited accounts.

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