24 Feb 2010
RAB Capital’s flagship $550 million Special Situations Fund managed by Philip Richards, the co-founder and former CEO, is to allow investors to auction their stakes.
Credit Suisse, prime broker to the fund, will conduct the auction that is to begin on March 8 and continue for one month. The auction will be open to investors in the Cayman fund and the US limited partnership fund.
Special Situations, which invests mainly in early stage natural resource plays but also gambled and lost on an investment in failed mortgage lender Northern Rock, was hit badly by the financial crisis. It has rebounded only marginally on the market recovery.
Investors voted to lock-up the fund 18 months ago until October 2011. The auction is expected to see existing investors offer new investors a discount in return for cashing out.
Investors in the London Stock Exchange listed RAB Specials Situations Company are unaffected by the auction. Shares in the listed fund traded at 31.5 pence on February 24 versus a net asset value of 45.01 pence on February 18. The discount for a single manager fund is unusual given that other funds run by Brevan Howard and BlueCrest Capital have rallied to their NAV or trade at a premium to it.
Since the lock-up Special Situations has gone from being leveraged to now containing net cash and is continuing to generate cash. It is now about two-thirds invested in listed equity and only one-third invested in less liquid private holdings, a virtual reversal of its portfolio holdings 18 months ago.
In addition, several of the fund’s big investments look well placed. Its biggest holding, accounting for nearly 20% of Special Situations, is in Falkland Oil and Gas. Energy plays in the Falkland Islands are gaining value ahead of new drilling activity expected later this year,
The fund’s second biggest play is in African Minerals and it also has a significant holding in Oxus Gold. Both African companies have received substantial Chinese investment in recent years.
Special Situations is RAB’s biggest fund, accounting for over one-third of its $1.4 billion in assets. Another fund, RAB Energy, was one of the top performing hedge funds of 2009.
Credit Suisse, prime broker to the fund, will conduct the auction that is to begin on March 8 and continue for one month. The auction will be open to investors in the Cayman fund and the US limited partnership fund.
Special Situations, which invests mainly in early stage natural resource plays but also gambled and lost on an investment in failed mortgage lender Northern Rock, was hit badly by the financial crisis. It has rebounded only marginally on the market recovery.
Investors voted to lock-up the fund 18 months ago until October 2011. The auction is expected to see existing investors offer new investors a discount in return for cashing out.
Investors in the London Stock Exchange listed RAB Specials Situations Company are unaffected by the auction. Shares in the listed fund traded at 31.5 pence on February 24 versus a net asset value of 45.01 pence on February 18. The discount for a single manager fund is unusual given that other funds run by Brevan Howard and BlueCrest Capital have rallied to their NAV or trade at a premium to it.
Since the lock-up Special Situations has gone from being leveraged to now containing net cash and is continuing to generate cash. It is now about two-thirds invested in listed equity and only one-third invested in less liquid private holdings, a virtual reversal of its portfolio holdings 18 months ago.
In addition, several of the fund’s big investments look well placed. Its biggest holding, accounting for nearly 20% of Special Situations, is in Falkland Oil and Gas. Energy plays in the Falkland Islands are gaining value ahead of new drilling activity expected later this year,
The fund’s second biggest play is in African Minerals and it also has a significant holding in Oxus Gold. Both African companies have received substantial Chinese investment in recent years.
Special Situations is RAB’s biggest fund, accounting for over one-third of its $1.4 billion in assets. Another fund, RAB Energy, was one of the top performing hedge funds of 2009.
