BOSTON (Reuters) - Billionaire investor John Paulson has put up part of his personal fortune as collateral to back a credit line for his $18 billion hedge fund Paulson & Co., a government filing shows.
According to a UCC Financing Statement filed in New York on Dec. 18, the 60-year old hedge fund manager pledged personal investments in four of his firm’s portfolios as additional collateral on a credit line extended by HSBC Bank USA.
Paulson pledged his stakes in the Paulson Partners Enhanced LP, Paulson Advantage II LP, Paulson Advantage Plus II LP, and Paulson Credit Opportunities IV LP funds, the filing shows.
News of the move was first reported by Bloomberg.
The credit line has been available to the hedge funds since Dec. 20, 2010, the filing shows, and was initially backed by fees paid to the funds. “Paulson has had a credit line for at least the last five years to handle short-term cash flow,” a spokesman for Paulson & Co said in a statement.
Hedge funds charge management and performance fees based on assets managed by the firm and its returns. In Paulson’s case the firm charges outside investors management fees of 1 to 2 percent plus a 20 percent performance fee.
Assets at Paulson & Co, which surged after the manager successfully bet against the overheated housing market in 2007, were significantly higher in 2010. They peaked at $38 billion in 2011 and have since dropped by roughly half amid uneven returns.
Last year Paulson International ended the year down 2.8 percent, a person familiar with the number said.
Forbes has estimated Paulson’s net worth at $11.4 billion and last year Paulson gave $400 million to Harvard’s School of Engineering and Applied Sciences, marking the largest gift ever for the Ivy League university. He also donated $8.5 million to a New York City charter school last year.
Much of Paulson’s wealth is tied up in his funds, where people familiar with the firm say that roughly half of the capital belongs to the manager and other members of the firm.
It is not unusual for wealthy individuals to pledge part of the their fortune to secure credit lines. In 2014 Goldman Sachs, for example, provided a credit line to billionaire investor Steven A. Cohen, who pledged his massive art collection as collateral.
Reporting by Svea Herbst-Bayliss and Jonathan Stempel; Editing by Frances Kerry