Liongate Capital Management to Shut Down

London’s Berkeley Square where Liongate is based. ENLARGE
London’s Berkeley Square where Liongate is based. Photo: Pawel Libera/LightRocket/Getty Images

Liongate Capital Management LLP, one of London’s best-known hedge-fund investors, which ran billions of dollars at its peak, is to shut down, according to a person familiar with the matter.

Liongate at one time managed $ 3.4 billion and advised clients on billions of dollars more, the person said. But its assets have fallen to less than $ 500 million after investor outflows in recent years, the person said.

It comes as the $ 3 trillion hedge fund industry struggles to make money for investors, and big name funds including Fortress Investment Group FIG 0.17 % LLC and Renaissance Technologies LLC shutter funds.

A spokesman for Principal Global Investors PFG 0.33 % LLC, the U.S. asset manager that bought a 55% stake in Liongate in 2013, said in an emailed statement to The Wall Street Journal that the firm has started the process of returning cash to investors and of scaling back the firm’s operations.

He said that Liongate, set up by Randall Dillard and Jeff Holland in 2003 had been subject to “a number of headwinds” from the loss of clients over the past two years. “This has placed the business under significant pressure,” he said. He added that Liongate was running $ 1.4 billion when Principal made its investment.

Liongate gathered a net $ 800 million from investors in 2008, which helped its flagship Multi-Strategy fund of funds grow to around $ 1.75 billion. Funds of funds such as Liongate select a range of hedge funds on behalf of investors. Liongate’s offices displayed some of the trappings of success, with items including a stuffed lion, and a mock-ancient map depicting one of the firm’s partners lifting the whole world.

But like many of its peers, Liongate suffered in recent years. The fund of hedge funds sector saw $ 118 billion of outflows in 2009, according to Hedge Fund Research, and further withdrawals after that, due to poor returns and questions over the extra layer of fees that such funds charge.

“If you’re in a high-fee business, it’s very, very competitive,” said Peter Borish, a co-founder of hedge fund Tudor Investment Corp. and now chief strategist at Quad Capital. “You need to perform to justify the fees and if you don’t perform then investors are going to shift assets elsewhere.”

Investors pulled assets from Liongate following a loss of around 8% in 2011, and withdrew further assets following the departures of Mr. Dillard and Mr. Holland earlier this year. The firm has more recently been led by Tim Stumpff, the firm’s president, who previously worked at Principal.

The acquisition by Principal, which runs $ 346 billion in assets for retirement plans and other institutions, of a stake in Liongate in 2013 had valued the firm at around $ 150 million, said the person. The spokesman for Principal said the firm had never disclosed the terms of the deal but said Principal wrote-off the value of its Liongate investment late last year at $ 45 million.

Write to Laurence Fletcher at [email protected]


WSJ.com: Markets

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