The long-delayed debut of former Merrill Lynch investment banking co-chief Dow Kim’s hedge fund will not be happening at all.

The launch of Diamond Lake Investment Group has been scuttled after institutions pulled out of commitments totaling some $1 billion, Bloomberg News reports. The investors turned skittish in the wake of the credit crisis and equities market swoon.

Kim—the second-highest-paid executive at Merrill in 2006—left the firm last May with plans to set up his own multi-strategy hedge fund with Merrill’s blessing and a promise of seed capital. But Kim and Merrill failed to come to terms on that investment, forcing Kim to slash the expected size of the fund from $3 billion to $1 billion. Kim then had to delay the fund’s launch—initially set for April—when Credit Suisse backed out of a $200 million investment.

The failure of Diamond Lake to get off the ground is not merely the scuppering of plans on paper: Kim had built up a staff of 30—including Syed Adlan, formerly of Tribeca Global Management, former Merrill Lynch prime brokerage chief David Milch, Pinewood Capital co-founder Michael Pasternack, former Ziff Brothers Investments manager Warren Silver, former Amaranth Advisors general counsel Karl Wachter and former Bear Stearns fixed-income strategist Bernd Wuebben—and opened a Singapore office.