London Hedge Fund Weavering Collapses

Mar 23 2009 | 1:55pm ET

London-based hedge fund Weavering Capital has entered voluntary liquidation after collapsing amidst huge investor redemptions.

Weavering’s investors will likely be left with nothing. An internal probe showed that the Weavering Macro Fixed Income Fund’s only asset was a $637 million swap agreement with a British Virgin Islands-based company, itself controlled by Weavering, that was unable to support the deal.

The firm had suspended withdrawals from the US$506 million fund earlier this month.

One Weavering investor, US$2 billion hedge fund shop Signet Capital Management, has already written down its entire investment with Weavering.

PricewaterhouseCoopers has been appointed liquidator of the Weavering fund.

“Over the period since early November 2008, the fund had received redemption requests exceeding $223 million but could only meet $90 million of these,” said Matthew Wilde, partner and head of PwC's hedge fund restructuring team. “With a further wave of provisional redemptions of up to $65 million in the pipeline, the directors of the fund called us in to look at the options.”

“This left the fund with no reasonable prospect of paying its debts and no option but to request that liquidators be appointed," said Wilde.

Wilde added that it appears likely that there will be a very substantial shortfall to the fund's creditors and remaining shareholder investors may be left with little.

Meanwhile, British regulators are rushing to see if fraud was involved in Weavering’s collapse. The U.K.’s Serious Fraud Office and Financial Services Authority are reportedly considering investigations into the hedge fund; the SFO plans to contact PwC this week to seek a meeting.


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