* To cut 30 staff globally, entire 16-member team in HK
* Perry cutting exposure to Asia; to focus on US, Europe- source
* To significantly reduce real estate, private equity operations
* Asia head Alp Ercil to start fund with colleagues in 2012
By Nishant Kumar
HONG KONG, Oct 21 (Reuters) - New York-based hedge fund Perry Capital, which manages about $8 billion, is shutting down its Hong Kong office and will cut 30 jobs globally, a source with direct knowledge of the matter told Reuters on Friday.
The firm, founded by Goldman Sachs alumnus and star hedge fund manager Richard Cayne Perry more than two decades back, was cutting exposure to Asia as it wanted to concentrate on the U.S. and European markets, the source said.
The first major closure in Asia by a global firm after the regional hedge funds suffered losses in August and September contrasts with a flurry of overseas hedge funds setting up offices in the region which has drawn the likes of GLG, Soros Fund Management and John Paulson.
The job cuts at Perry include the entire 16-member staff in the firm’s Hong Kong office, including Alp Ercil, a partner and the head of the firm’s Asia operations.
Ercil declined an offer from Perry to relocate to other offices in London and New York, the source said.
Ercil resigned and plans to start his own hedge fund next year with some Perry Capital staff, another source with direct knowledge of the matter told Reuters.
Perry Capital has decided to “concentrate primarily in hedge funds investing in Europe and America,” the source said.
Concerns over the global economy and European debt crisis have wiped out roughly $5.29 trillion in market capitalization from the global stock markets in the September quarter, as measured by the MSCI All Country World Index .
July-September ranked as the fourth worst quarter in the hedge fund industry’s history, according to data from Hedge Fund Research.
Funds managed by the $2 trillion industry’s most established stars such as John Paulson and Pershing Square Capital Management’s William Ackman were down 47 percent and 16 percent respectively in 2011 up to end-September.
The September quarter trails only the third quarter of 1998 and the third and fourth quarters of 2008 when global hedge fund giants such as Fortress Investment Group LLC and Citadel had slashed Asia operations in the wake of the global financial crisis.
About 80 hedge funds in Asia have closed down this year as investors shy away from allocating fresh capital to the region, according to data from industry tracker Eurekahedge.
“There is no denying that the Asian hedge fund industry is under significant pressure today, with macro headwinds stalling assets recovery, and defensive portfolios clipping returns,” said Aradhna Dayal, editor of industry tracker AsiaHedge.
“While redemptions, at least at this stage, seem fund-specific and not industry wide, that may well change as the year draws to a close.”
Asia-focused hedge funds recorded a net outflow of $1.9 billion in September, their first monthly net outflow in 17 months, Eurekahedge data showed.
“We’ll likely see another round of consolidation within the domestic players and some of the smaller global hedge funds may also begin rethinking their Asia strategy,” Hong Kong-based Dayal said.
Perry Capital manages hedge funds, real estate and private equity funds.
It has decided to significantly reduce its real estate and private equity operations and manage Asia exposure in its hedge funds from offices in New York and London, the source said.
New York-based Michael Neus, a managing partner and general counsel for Perry Capital, declined comment.
Ercil also declined comment when contacted by Reuters.