Anchorage Capital Group closing down $7.4 billion flagship fund – Pensions & Investments

December 16, 2021 by No Comments

Anchorage Capital Group is closing down its flagship evergreen credit hedge fund Anchorage Capital Partners.

The manager will close the fund due to present challenges for an evergreen fund that allocates capital across the credit spectrum in order to deliver equity-like returns with downside protection on an unlevered basis, CEO Kevin Ulrich said in a letter to clients obtained by Pensions & Investments.

The fund, which has about $7.4 billion in assets under management, has returned an annualized net 9.5% since its inception in 2003, Mr. Ulrich said in the letter.

Despite the positive history and a net return of 18.5% for the year through Nov. 30, Mr. Ulrich said: “In this current market where indiscriminate access to capital, elevated equity market multiples, default rates near record lows, and central bank policies supportive of risk assets, we believe that the asset-liability structure of ACP is not best-suited to take advantage of opportunities in today’s market environment.”

Mr. Ulrich added in the letter that additional details will be forthcoming, and the firm will “manage ACP through an orderly realization of its investments and continue to return remaining capital to investors. As such, we have suspended redemptions from ACP so that we may return capital to all investors equitably. We will continue to partner with ACP’s investors over the course of the return of capital to create products and structures that will help them to capture future credit opportunities with the most appropriate liability structure.”

He said the liability structure of the firm’s structured credit strategies and drawdown funds are best suited for today’s credit market.

Also in the letter, Mr. Ulrich said Yale Baron, the firm’s global head of structured credit, and Thibault Gournay, global head of research, will become co-chief investment officers of Anchorage Capital Group, and Natalie Birrell, currently chief operating officer, will become president. Mr. Ulrich, who has previously served as CIO, will serve as chairman of Anchorage Capital Group and will continue to serve as portfolio manager of Anchorage Capital Partners through the process of returning its capital to investors.

Past investors in Anchorage Capital Partners include the $22.7 billion Kentucky Retirement Systems, Frankfort, which is now the Kentucky Public Pensions Authority, and the $16 billion West Virginia Investment Management Board, Charleston.

A spokesman for Anchorage Capital Group declined to provide further information.

Anchorage Capital Group has about $30 billion in assets under management.



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