Allowing clients access to their money is a real pain in the ass. Post some underwhelming returns or worse for a few years straight and all of a sudden the goddamned ingrates want it back. So, uh, Jamie Dinan and York Capital aren’t going to do it anymore. (And not just temporarily this time.)
Mr. Dinan said he planned to shut down York’s European hedge funds and to turn its flagship U.S. hedge fund into one running mainly internal money. The strategies together manage less than $3 billion after years of weak performance and investor defections.
York still expects to run roughly $9 billion in private equity, private debt and other vehicles that lock up client capital for longer periods.
So, uh, who’s in for making it impossible to get your cash out of the hands of a guy who’s down 6.6% this year for the foreseeable future? Great. Oh, and by the way? There are a couple of other things you should know.
The firm also has gone through a rocky attempted succession, with Mr. Dinan getting more involved in running the firm early this year after ceding some responsibility. York said in an investor letter Monday that co-investment chief Christophe Aurand was leaving at the end of the year, Mr. Aurand having told the firm he wanted to “take a step back….”
Mr. Dinan will continue as chairman and chief executive of York, the letter said, with William Vrattos continuing as sole investment chief.
The letter also said York’s Asian hedge fund, led by Masa Yamaguchi, which has performed well in recent years, and “related vehicles” would be spinning out into an independent firm.
So some people (namely Jamie Dinan) believe that Jamie Dinan is poised to become a private equity titan. Credit Suisse is not so sure. Or, rather, they are sure, just in the opposite direction.
Credit Suisse said on Tuesday it expects to book a $450 million impairment on its stake in York Capital Management, as the U.S. investment firm founded by Jamie Dinan winds down most of its hedge-fund strategies in the wake of this year’s market upheaval. The Swiss bank agreed to take a 30% stake in York in 2010, offering to pay at least $425 million at the time to give clients access to alternative investments…. Credit Suisse bought the stake at a time when many Wall Street firms were seeking ways to tap into hedge funds’ fee income, because new regulations in the wake of the financial crisis had made it harder for banks to wager with their own money. But such minority stakes weren’t without risks, as many investment firms struggled to perform or even shuttered, rendering the stakes worthless.