Hedge fund Centaurus to return cash, shut Asia office - source

HONG KONG/LONDON Thu May 2, 2013 8:55am EDT

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HONG KONG/LONDON (Reuters) - Hedge fund firm Centaurus Capital is returning external investors all of their money after clashes with them over where the best money-making opportunities lay, a source familiar with the firm said.

The partners of the London-based firm will now only trade using their own cash after investors challenged a decision to focus on so-called "event-driven" strategies such as bets on company takeovers, the source said.

There has been no decision about whether to close any of its three funds, the source added.

Centaurus confirmed it was returning money to investors but declined to comment further.

"We have taken the decision to return investors' funds and go private. We are extremely grateful for the support of our investors over many years; however we are keen for the investment flexibility that running our own money will deliver," Randel Freeman, chief investment officer, said in a statement.

Centaurus will also close its Asia office in Hong Kong, four sources familiar with the matter said. The decision will result in the departure of its entire Asia team including fund manager Kim Yu Ang.

Centaurus is the latest hedge fund to focus on managing its founders own fortune rather than working for others.

Brevan Howard co-founder Chris Rokos set-up a family office to manage his wealth after leaving the hedge fund giant last year, two sources said in January. Billionaire George Soros also converted his hedge fund into a family office in 2011.

This is not the first time Centaurus, founded by Frenchman Bernard Oppetit and a team from BNP Paribas (BNPP.PA) in 2000, has lost investors. For years one of London's best-known firms, it suffered a chastening 2008 when it was forced to wind down its flagship $1.2 billion Alpha fund.

After launching new funds and recovering its asset base, it has again lost clients more recently.

According to its filing with the U.S. regulator, Centaurus managed $646 million at the end of December, but the source said assets had since slipped below $500 million. It is not clear how much of that is third-party investors' money.

Event-driven funds have proven unpopular with some investors since the financial crisis as fewer mergers and acquisitions - notably in Europe - deprived managers of opportunities.

However, Centaurus's three funds have performed well even as they lost clients.

The Global Event Opportunities fund is up 4.2 percent year to date and was up nearly 11 percent in 2012, the source said.

Harvard-educated Ang has made money every year since launching the Centaurus Asia Pacific Opportunities fund in 2007. The event-driven fund was up 2.6 percent in the first quarter of 2013, according to its newsletter, though this underperformed a 8.4 percent rise in the Eurekahedge Asia event-driven index.

Centaurus joins the likes of New York-based hedge fund Perry Capital and UK-based Wessex Asset Management in retreating from Asia since 2011.

The firm expects to have returned all investor cash over the next few weeks, the source said.

(Editing by Sinead Cruise and Mark Potter)

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