Australia's Absolute Capital appoints administrator

SYDNEY (Reuters) - Australian hedge fund Absolute Capital Group said it has appointed an administrator to run its operations following a sharp decline in revenues in the wake of the U.S. subprime mortgage crisis.

The appointment of administrators relates only to Absolute's corporate entities, not to its funds, Absolute said in a statement.

"Following a period of prolonged illiquidity in global and local credit markets, the reduction in fees paid to the corporate entity from a number of its investment products impacted the long-term viability of the business," it said.

Absolute and Australian-managed Basis Capital, along with two funds managed by Macquarie Group MGQ.AX, suffered heavy losses in the aftermath of the subprime troubles.

Absolute Capital, which manages A$400 million (170 million pounds) of assets and is half-owned by Dutch bank ABN AMRO AAH.AS, temporarily closed in July two funds with a combined A$200 million in assets.

It said at the time that it was difficult to offload investments in collateralised debt obligations (CDOs). One of the funds lost between 8 and 9 percent in July and August.

Hedge funds generate revenues by charging fees based on performance.

Absolute's creditors are expected to meet on Monday.

Absolute Capital is not related to the London-listed firm Absolute Capital Management ACMH.L.