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Centaurus Alpha Fund - Event driven fund

2008-12-04

Count of distinct funds: 1
Capital base: $1.2 billion
Loss: 25%

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stories: finalternatives.com

Reports have emerged that Centaurus Capital is closing its flagship fund, Centaurus Alpha Fund. The fund liquidation comes on the heels of investors rejecting a restructuring plan that would lock up their capital in exchange for reduced fees. Finalternatives.com reports:

[I]nvestors in the Centaurus Alpha Fund, which had lost about a quarter of its value, refused to accept the new terms, the Financial Times reports. Just a handful of the Alpha Fund's investors are expected to remain with Centaurus.

In October, Centaurus asked investors to accept a new two-year lockup in exchange for the return of 30% of their capital and reduced fees. The firm blamed a "deleveraging spiral" for its losses, which it called "far beyond what can be justified on the basis of fundamentals."

Instead, Centaurus will return most of the $1.2 billion that is left in the Alpha Fund. The firm has imposed a 10% limit on monthly pay-outs, but hopes to wind the fund down as quickly as possible without being forced to sell assets at distressed prices.

Despite this setback, Centaurus Capital expects to continue running its Asia hedge fund and may even launch new funds in 2009.

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Important: This fund is on our list of hedge funds that have "imploded" (see also ailing lenders). However, please note that "imploded" is a somewhat subjective. The "imploded" list contains hedge funds (or other unregulated and autonomous speculative investment funds) which have gone through some sort of permanent adverse change. This is a somewhat subjective call, and does not necessarily mean total shutdown or bankruptcy. It can also mean steep and rapid mark-downs in net asset value; or abnormal "bail-out" by corporate parents or peers in order to avoid write-downs and provide liquidity. The funds are of any type and sector.