Funds News

Hedge fund D.B.Zwirn may set up new portfolio

BOSTON, April 2 (Reuters) - Hedge fund manager Daniel Zwirn, whose two largest offerings are being shut down after investors asked for their money back, is ready to set up a new fund, a person familiar with the talks said on Wednesday.

A number of people who had money with New York-based D.B. Zwirn & Co have asked the manager to set up a new fund and the hedge fund manager is ready to proceed, the person said, asking to remain anonymous because negotiations are still going on.

“It is still in the early stages and nothing has progressed to the point of legal documents being drawn up, but the talks are ongoing,” the person said.

The firm, which manages over $5 billion in assets and employs over 200 people, decided in February to liquidate its Special Opportunities fund and its sister offshore fund, after investors asked for roughly $2 billion back.

Zwirn, who once worked at JP Morgan Chase’s Highbridge Capital Management hedge fund group, specializes in illiquid investments and locks up client money for up to three years.

This is a long time even by hedge fund industry standards, especially at a time investors are becoming more nervous about the credit crisis, tumbling stock markets at the start of the year and fears of slower growth.

Zwirn’s two funds returned roughly 11 percent last year, but investors still demanded to get out this year after growing impatient with him in the wake of some accounting problems that delayed the calculation of their investment statements.

Due to the redemption requests, Zwirn decided to liquidate the two big funds and return money to investors. Some of those investors now want him to keep managing money for them. (Reporting by Svea Herbst-Bayliss; Editing by Andre Grenon)