Wires

UPDATE 1-Blackstone-backed Senrigan creates separate vehicle after losses

Share

* Puts 5 investments worth $40 mln into separate vehicle

* Senrigan's assets under management halved to $500 mln

* The hedge fund loses 15 percent through September

* Its 2012 record is among worst of major regional funds

(Adds details, background) By Nishant Kumar

HONG KONG, Oct 12 (Reuters) - Senrigan Capital, anAsia-focused hedge fund backed by Blackstone Group , hasremoved five investments from its portfolio and placed them intoa separate vehicle after heavy losses this year, two sourcesfamiliar with the matter said.

Senrigan, headed by former Citadel trader Nick Taylor, hasseen its $1 billion under management last year fall by half andits 2012 record is among the worst performing of the majorregional hedge funds.

The fund was down about 15 percent through September thisyear and this has led to investors calling for their money back,said the sources, who are familiar with Senrigan's returns.

Senrigan is calling the separate fund a "special purposevehicle", they added.

Such vehicles are usually referred to as "side pockets" inthe hedge fund industry, whereby funds separate outhard-to-sell, illiquid investments from the main portfolio.

Senrigan spokeswoman Katarina Bendle declined to comment.

Senrigan, launched in 2009 with $150 million, was one of thefew hedge funds in Asia that surpassed the $1 billion mark. Theassets it managed include $150 million in seed capital from NewYork buyout giant, Blackstone.

Managed by British-born Taylor, the Asia focusedevent-driven hedge fund lost 8.6 percent last year, erasing itsentire 5.85 percent gain in 2010.

Event-driven funds focus on mergers and acquisitions and onstrategies such as capital-structure arbitrage.

The hedge fund told clients about the special purposevehicle last month, the sources said. They will be paid 6percent of their investment into the hedge fund when Senriganliquidates the assets put into the side pockets.

The investments are worth about $40 million in total andinclude a bet taken on the Australian miner Sundance Resources

which has accepted a $1.4 billion takeover offer fromprivate Chinese company Hanlong Group.

Side pockets are like mini suspended funds used by hedgefunds to house illiquid assets and have to be unwound over anextended period of time, during which investors can't get out.

At the height of the 2008 financial crisis, when buyers formany assets disappeared and investors started demanding theirmoney back, hedge funds created side pockets that could be wounddown separately to stop clients who redeemed later from beingleft with the hard-to-sell assets.

Assets worth up to $400 billion were parked in side pockets,gated or restructured during the crisis globally, said NewYork-based Jared Herman, founder of Hedgebay, a secondary marketfor hedge fund stakes.

(Reporting by Nishant Kumar; Editing by Michael Flaherty andEdwina Gibbs)

((nishant.kumar@thomsonreuters.com)(+852 28474064)(ReutersMessaging: nishant.kumar.reuters.com@reuters.net))

Keywords: SENRIGAN HEDGEFUND/ASIA