Highbridge Capital Management LLC is placing a restriction on client withdrawals to avoid the forced sale of assets, according to the Wall Street Journal, which quoted people familiar with the fund.
The New York-based hedge fund company’s multistrategy fund has slumped about 25% this year. Investors have asked to withdraw 36% of its assets, the Journal reported, citing individuals knowledgeable about the fund.
To protect the fund’s viability, Highbridge will pay 30% of withdrawals in cash and distribute the remainder in a year or more, the Journal said. After withdrawals and investment losses, this once $15 billion fund might be be worth $6 billion.
Meanwhile, JPMorgan Chase & Co. of New York, which owns 78% of Highbridge, will forgo millions of dollars in fees contributed by Highbridge when the fund makes money. The managers take around 25% of the fund’s profits, half of which go to JPMorgan.
Highbridge’s poor performance is attributable to extensive market declines and shrinking performance fees earned by funds, the Journal reported.
To persuade investors to stay, Highbridge is reducing fees and offering other incentives.
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