RAB Set to Delist as Assets Evaporate

RAB Capital the hedge fund that was the toast of London’s financial community in the boom, is poised to delist from the UK’s junior market amid a crippling wave of redemption requests from investors.

Trader at London Stock Exchange, England.
Trader at London Stock Exchange, England.

It will bring to a close the company’s painful four-year public demise, which saw investors and shareholders lose billions as a result of high-risk investments in companies which included the doomed lender Northern Rock.

RAB Capital, which at the beginning of 2011 managed assets of just more than $1 billion – a far cry from its 2007 peak of $7 billion – has seen its remaining assets begin to evaporate after a three-year moratorium on withdrawals from its main fund expired last month.

Initial redemption requests of $370 million from the flagship Special Situations fund lodged in April have been followed by outflows from its $120 million Cross Europe fund and the resignation of one of its remaining star money managers, Gavin Wilson.

The Cross Europe fund has had a request from its largest investor for its money back, triggering its liquidation, said a person familiar with the fund.

Meanwhile RAB managers expect investors to pull out of Mr Wilson’s $250 million Energy fund because of his departure.

Founded on April 1 1999, RAB grew rapidly thanks to the returns racked up by its founder Philip Richards and the connections of his partner, Michael Alen-Buckley, brother-in-law of hotelier Rocco Forte. Prominent backers of RAB, which counts former chancellor Norman Lamont among its directors, included Britain’s richest man, Lakshmi Mittal, who invested $200 million in the firm’s flagship Special Situations fund in 2006.

The firm’s fortunes reversed sharply in 2007, the year Mr Richards proclaimed his Special Situations vehicle the “best hedge fund in the world”.

By the end of that year, the fund had lost 80 percent of its value, forcing RAB to “gate” investors – prohibiting them from withdrawing money for three years to sidestep an asset fire?sale in distressed conditions.

In a trading update on Wednesday, RAB said: “The board intends to review the options for the company, including the appropriateness of maintaining an Aim listing, and the possible use of the company’s surplus capital to provide some liquidity to shareholders.”

RAB declined further comment. The shares closed down 24.4 percent to 7.75p.