LONDON (Reuters) - British credit hedge fund firm Lucidus Capital will halve in size to between $400 and $500 million, a source with knowledge of the matter told Reuters, after investors said they planned to pull money from its underperforming funds.
The firm had been talking to investors and restructuring its business for the last six weeks or so and expected to see unspecified job losses as a result, the source said, although it would maintain some degree of operations in the United States.
The firm had seen redemptions for less than 50 percent of its assets under management, the source said, without giving details about their size and number. After giving notice, it can take several months for an investor to have funds returned.
The company currently employs around 30 in its London office, the source said, and was in the middle of restructuring negotiations with staff. Market talk that the office could be cut back to eight staff in London was incorrect, he added.
The news follows the late October exit of firm co-Chief Executive Darryl Green, who co-founded the business in 2009 with Geoffrey Sherry. Sherry remains with the firm as chief investment officer.
Both Lucidus’ credit funds - which collectively manage around $950 million - have suffered this year and were in the red at the end of October.
The Lucidus Leveraged Credit Fund was down 4.51 percent in the year to end-October, while its Green T G2 fund, was down 2.01 percent, the source said.
A London-based hedge fund investor said the funds’ weak performance had hurt their marketing potential.
“Their returns have been low-single digits for a long time; it’s not quite the profile that a lot of people are looking for in that space.”
The average relative value corporate credit fund had returned 0.72 percent in the year to the end of October, data from industry tracker HFR showed. Across all strategies in the $3 trillion industry, the average performance is flat.
The news comes a day after billionaire Michael Platt announced he was taking his $8 billion hedge fund private amid pressure on fees, rising costs and a lacklustre performance.
Reporting by Simon Jessop; Editing by Elaine Hardcastle