HEDGE fund Breeden European Partners has more than halved its stake in troubled social housing repairs group Connaught, after the value of its holding plunged by more than £13m in recent weeks.
Breeden European, which was set up by former US Securities & Exchange Commission chairman Richard C. Breeden, had declared a stake of 13 per cent, or 18m shares, at the start of July.
A stock exchange filing on Wednesday showed Breeden cut this to 6 percent, or 8 million shares, on August 6, the day Connaught said it would make a loss for the year.
Connaught is in desperate need of cash as government spending cuts have hurt its core business.
At the beginning of July Breeden's holding would have been worth about 19.6 million pounds, but by the close of play on August 5, Connaught's shares were priced at 29 pence and the value of the fund's holding had plummeted to just £5.3m.
Breeden European was not immediately available for comment.
The investor had first disclosed a stake of four per cent back on April 6 before increasing this in stages.
The stake building had prompted speculation that Breeden European could be seeking to engineer a merger between Connaught and social housing and care home provider Mears, in which it also owns shares.
Since then however, Connaught has stunned the market by announcing it is in dire need of funds and will make a loss for the year, almost wiping out the value of its shares.
Parvus Asset Management and Norway's sovereign wealth fund had also exited most of their holdings in the firm, according to reports.
City A.M. Reporter