SFO may investigate Weavering Capital's failed flagship fund

Date: Monday, March 23, 2009
Author: Yvette Essen, Telegraph

A spokesman for the SFO said it is "seeking an early meeting" with PricewaterhouseCoopers, which was appointed liquidator to Weavering's biggest fund on Thursday night. The Macro Fixed Income Fund, which is based in the Cayman Islands and specialises in fixed-income investments, suspended redemptions earlier this month.

Matthew Wilde, partner and head of PwC's hedge fund restructuring team, said since early November 2008, the fund received redemption requests exceeding $223m (£154m) but could only afford to meet $90m of these. He added the fund was recently valued at $506m but had "no reasonable prospect of paying its debts and no option but to request that liquidators be appointed".

Weavering Capital also revealed on its website that "an internal investigation is being conducted into a transaction between the fund and a company controlled by a related party of Weavering".

PwC said the flagship fund was "almost entirely dependent" on a series of interest-rate swaps worth $637m with that related – and so far unnamed – company.

It is thought that Weavering Capital, which was set up in 1998, is the first major UK hedge fund to collapse in the current turmoil. Restructuring specialist MCR has been appointed as administrator to the management company.

Mr Wilde warned that investors were unlikely to see much of their money returned. "It appears likely that there will be a very substantial shortfall to the fund's creditors and its remaining shareholder investors may be left with little."