(Bloomberg) — Anchorage Capital Group plans to shut its $7.4 billion hedge fund, Anchorage Capital Partners, and return money to all of its investors.
“We will manage ACP through an orderly realization of its investments and continue to return remaining capital to investors,” the New York-based firm said in a letter to clients. A spokesman declined to comment Wednesday.
Anchorage will focus on its $18 billion structured-credit business and the $4 billion it manages in longer-lockup vehicles.
Chief Executive Officer Kevin Ulrich will become chairman and cede day-to-day responsibilities. Those duties will be taken over by Yale Baron, global head of structured credit, and Thibault Gournay, global head of research.
Current credit markets “present challenges for an evergreen fund designed to tactically allocate capital across the credit spectrum,” Ulrich said in the letter. Buoyant equity markets, low default rates and central bank policies were among reasons Ulrich cited as impediments to the typical credit hedge fund strategy, which allows for more frequent investor redemptions.
Anchorage Capital notched a big win this year with the sale of Metro-Goldwyn-Mayer to Amazon.com Inc. The firm, which invested $500 million in MGM more than a decade ago, holds a roughly 30% stake that’s now worth about $2.5 billion, people with knowledge of the matter have said. The hedge fund gained 18.5% this year through November, and MGM has been a major driver.
Read more: Ulrich’s Anchorage Capital Scores $2 Billion Win on MGM Deal
Assets in Anchorage’s main fund declined in recent years from a peak of $14.5 billion. The firm closed the vehicle to most new investments in 2017 as it raised money in other products, including lower-fee structured credit funds.
Anchorage took ownership of MGM with other investors as part of a 2010 bankruptcy agreement. It swapped debt holdings for equity to become a majority shareholder, and Ulrich took a seat on its board.
(Updates with MGM deal in sixth paragraph.)
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