Hedge fund Ore Hill limits redemptions

By Svea Herbst-Bayliss

BOSTON (Reuters) - Hedge fund Ore Hill Partners, which specialises in credit strategies, has barred clients from redeeming their money from its flagship offering, imposing a freeze just as investors clamored for an exit, the company said on Friday.

The firm, half owned by Man Group (EMG.L), the world's largest publicly traded hedge fund, put up a so-called gate provision on its roughly $1.2 billion (650 million pound) Ore Hill International portfolio this week, limiting the amount of withdrawals after investors sought the return of roughly $300 million, said an investor who asked not to be identified.

Heavy redemptions for September triggered an automatic gate, said Sophie Sophaon, a spokeswoman for the fund. Fund directors are considering what measures to take that will be in the best interest of all investors, she added.

Ore Hill manages roughly $3 billion in total and Sophaon said other strategies are not affected by this measure.

Through July, the portfolio lost 6.5 percent this year, unnerving many investors enough to ask for their money back sooner rather than later, said the investor, who asked to remain anonymous because he did not want to be publicly identified speaking about the private offering.

The fund returned 1.8 percent last year after gaining 13.3 percent in 2006 and 10.95 percent in 2005.

The fund's managers told investors a board meeting was planned and more information would be announced soon, sowing uncertainty among some investors over what might happen to their money now that it is locked in longer than they had hoped, the investor said.

Unlike mutual funds, hedge funds often lock in client money for many months or even years.