Reuters – Absolute Capital Management plans to demerge its emerging market credit fund business Argo Capital to disassociate it from the European hedge fund firm’s recent problems, Absolute said on Wednesday. Absolute Capital said it would apply for Argo’s shares to trade on London’s junior AIM market within six months of the demerger. <\/p>\n
Absolute shares fell 70 percent in one day in September after co-founder and chief investment officer Florian Homm resigned. The company then suspended investor exits from a number of equity funds in the face of heavy redemption demands. "The Argo business has been in the shadow of the ACMH (Absolute Capital) business and all its problems," Absolute Capital Chief Executive Jonathan Treacher told Reuters.<\/p>\n
"I think that business could raise significantly more … (assets under management) if it didn’t have questions about ACMH hanging over it." Argo runs around $1 billion in assets. Absolute Capital said in September it would suspend investor redemptions and create "side pockets" — separate investor vehicles — for illiquid positions.<\/p>\n
A review around the time of Homm’s departure had revealed between $440 million and $530 million of its $2.1 billion equity fund assets were illiquid and could not be sold at stated market values. Treacher told Reuters investor redemptions on these side pockets may be extended beyond November.<\/p>\n