Polygon Offers Hedge-Fund Investors Immediate Redemptions at 25% Discount

Date: Thursday, May 27, 2010
Author: Bloomberg

Polygon Investment Partners LLP is allowing clients to exit its biggest hedge fund at a 25 percent discount rather than wait as long as two more years to get all their money.

The firm, run by Reade Griffith and Paddy Dear in London, suspended withdrawals from its $3.7 billion Global Opportunities Fund in October 2008, saying it would take until 2012 to return all the cash. Investors representing about 5 percent of the fund’s holdings have so far accepted the discount, said four people with knowledge of the matter, who asked not to be identified because the information is private.

The discount to the fund’s net asset value for immediate redemptions was set through an auction run by Credit Suisse Group AG, the firm said in an e-mailed statement to Bloomberg News. RAB Capital Plc and Plainfield Asset Management LLC have taken similar steps, with some investors in RAB Special Situations Fund accepting a discount of about 30 percent, a person with knowledge of the matter said. Caroline Villiers, a spokesman for London-based RAB, declined to comment.

“We are pleased to have been able to offer this opportunity to those of our investors that had an immediate need for some liquidity,” Dear said in the statement.

Polygon Global Opportunities lost 48 percent of its value in 2008, hurt by positions in convertible bonds, and has since returned about 50 percent of its assets to investors. The firm expects to give back 50 percent of remaining investor cash this year.

Polygon oversees about $5.3 billion, including Lyon Capital Management LLC, a manager of $2.5 billion of high-yield, high- risk loans that a Polygon unit purchased in November 2009.