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Odey Asset Management has asked investors to support a restructuring of one of its oldest funds as part of wider efforts to extract its founder, Crispin Odey, from the business in the wake of allegations of serial sexual misconduct.
In a letter to clients on Friday and seen by the Financial Times, the hedge fund firm proposed to restructure Cayman Islands-based OEI Mac by switching shareholders’ investments to a new fund, which would then be rehoused under a rival firm.
Under the plans, Freddie Neave, a portfolio manager at Odey Asset Management, would also run the new fund and leave the firm to work at the competitor, following “a similar investment objective and strategy” as before.
Neave took over managing OEI Mac from Crispin Odey three weeks ago, after the financier was ousted from the firm he founded in 1991.
One of the key funds upon which Crispin Odey built his renown, OEI Mac was founded in February 1994 and had about $507mn under management earlier this year. The firm had to suspend withdrawals from it and a string of other funds earlier this month as Odey Asset Management struggled to contain the fallout from sexual misconduct allegations against Crispin Odey. He strenuously denies the claims.
The allegations from 13 women detailed in an FT investigation published at the beginning of this month led to key banking partners severing ties and the break-up of the firm, as regulators and politicians circle.
After two weeks of silence regarding potential buyers of certain of the firm’s funds, on Tuesday Odey Asset Management said it was in “advanced talks” about transferring four funds and their manager, Oliver Kelton, to London-based investment boutique SW Mitchell Capital.
The proposed restructuring of OEI Mac will test investor support for Neave and the firm’s ability to successfully extract Crispin Odey from the strategies he oversaw. The financier had about $600mn of his own money invested in funds he previously managed at the firm.
The firm said it “expected” that Crispin Odey would not switch his investments to the new fund. It added that it would cease to act as an investment manager for OEI Mac, which would have to find a new home if it were to remain a going concern.
In the letter to clients, the firm acknowledged that if there were not “adequate support” for the restructuring proposal, the alternative “would be to compulsorily redeem investors in the fund.”
It added that “discussions are under way” with many of the fund’s existing service providers, including its prime brokers, with a view to them being appointed to the new fund.
Odey Asset Management did not immediately respond to a request for comment. The Financial Conduct Authority declined to comment.