Earlier this week, we had the opportunity to discuss what might be the finest hedge fund exit in the past year: Steve Kuhn's sudden, philanthropically inspired kiss-off from Pine River Capital Management, which the two parties sealed – as is customary – with a lawsuit. Now Pine River is undergoing yet another notable split, though this time without the same acrimonious recriminations or millions in disputed pay:
Pine River Capital Management plans to spin off a nearly $2 billion government bond-trading fund into a stand-alone firm Jan. 1, in what is likely to be one of the biggest new hedge-fund launches next year. The Minnetonka, Minn.-based firm profited big off the rebound in government-backed mortgage bonds following the financial crisis, but its assets have shrunk recently. Executives for Pine River told investors on calls Tuesday and Wednesday that Renos Dimitriou and his London-based team would launch the roughly $1.7 billion fund next year, according to people familiar with the matter.
Dimitriou's exit – he plans to open a fund in London called Elan Capital Management – may lack the drama we've come to expect from such breakups. But it does come with a side benefit for his erstwhile employer: Pine River might not have to endure the burden of being considered a hedge fund firm for much longer:
Pine River has returned billions of client money since 2015, including after the departure of a key portfolio manager and the poor performance of some funds. It plans to return more than $500 million in the next several months after another fund it planned to spin off, its China fund, lost money and investors redeemed. It said earlier this month it would be closing that fund.
Pine River has raised some new money from investors recently. Its permanent capital business, advising mortgage real-estate investment trusts, has grown to make up about half its assets under management.