Odey Asset Management pushes to restructure one of its oldest funds

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Odey Asset Management has asked investors to support a restructuring of one of its oldest funds as part of wider efforts to extract its founder, Crispin Odey, from the business in the wake of allegations of serial sexual misconduct.

The news, communicated to investors on Friday, marks a key step in the unwinding of Odey’s 32-year-old hedge fund, which on Friday also announced its star fund manager James Hanbury is in “advanced talks” to move his portfolio to boutique advisory firm Lancaster Investment Management.

In a letter to clients on Friday and seen by the Financial Times, the hedge fund firm proposed to restructure Cayman Islands-based OEI Mac by switching shareholders’ investments to a new fund, which would then be rehoused under a rival firm.

Under those plans, Freddie Neave, a portfolio manager at Odey Asset Management, would run the new fund and leave the firm to work at the competitor, following “a similar investment objective and strategy” as before.

Neave took over managing OEI Mac from Crispin Odey three weeks ago, after the financier was ousted from the firm he founded in 1991.

One of the key funds upon which Crispin Odey built his renown, OEI Mac was founded in February 1994 and had about $507mn under management earlier this year. The firm had to suspend withdrawals from it and a string of other funds earlier this month as Odey Asset Management struggled to contain the fallout from sexual misconduct allegations against Crispin Odey. He strenuously denies the claims.

The allegations from 13 women detailed in an FT investigation published at the beginning of this month led key banking partners to sever ties and prompted steps to break-up of the firm, as regulators and politicians circle.

After two weeks of silence regarding potential buyers of certain of the firm’s funds, on Tuesday Odey Asset Management said it was in “advanced talks” about transferring four funds and their manager, Oliver Kelton, to London-based investment boutique SW Mitchell Capital.

On Friday evening, Odey Asset Management told clients it was in “advanced talks” to move five funds run by Hanbury to Lancaster, a London-based partnership founded in 2007.

Hanbury will also move to Lancaster, under the plans that must be approved by Odey Asset Management’s leadership, the boards of the funds and regulators, according to the letter from the hedge fund’s chief operating officer and chief financial officer Michael Ede.

Lancaster did not immediately respond to request for comment on whether it would be taking other Odey Asset Management staff along with Hanbury.

Odey Asset Management declined to comment beyond the letter.

The proposed restructuring of OEI Mac will test investor support for Neave and the firm’s ability to successfully extract Crispin Odey from the strategies he oversaw. The financier had about $600mn of his own money invested in funds he previously managed at the firm.

The firm said it “expected” Crispin Odey would not switch his investments to the new fund. It added it would cease to act as an investment manager for OEI Mac, which would have to find a new home if it were to remain a going concern.

In the letter to clients, the firm acknowledged that if there were not “adequate support” for the restructuring proposal, the alternative “would be to compulsorily redeem investors in the fund”.

It added that “discussions are under way” with many of the fund’s existing service providers, including its prime brokers, with a view to their being appointed to the new fund.

The Financial Conduct Authority declined to comment.