Stricken RAB to pay $400m to investors

A RAFT of redemption requests has hit hedge fund RAB Capital, as investors look for an exit from its beleaguered flagship vehicle.

Investors are seeking to withdraw almost $400m (£245m) from RAB’s $500m Special Situations fund, three years after harmful losses forced it to restrict redemptions.

A series of ill-fated investments – including a stake in Northern Rock before the lender’s high-profile collapse at the hands of the credit crisis – made RAB one of the biggest hedge fund casualties of the crash.

The firm locked investors into the fund for three years in September 2008, until it could regain sufficient liquidity to pay them back.

RAB said yesterday it expected to repay 79 per cent of investors in October. The firm said the payout requests were in line with its expectations, and that it now has “adequate liquid resources to pay the amount in full”.

It added that its revenues would be five per cent lower than last year due to the redemptions.

Last year, RAB made a pre-tax loss of £20m on revenues of £11.9m.

The hedge fund once held assets under management of more than $7bn, yet controlled just $1.1bn last year.

“We made mistakes in the run up to the crisis and that has been a chastening experience,” said RAB co-founder and manager of the Special Situations fund Philip Richards.

“We have learnt from it and are already using those lessons to the benefit of our investors.”

He added: “We are pleased to be in a position to fulfil our pledge to pay out those investors who wish to redeem from the fund.”