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Odey Asset Management is seeking investor support in restructuring one of its oldest funds as part of efforts to remove its founder, Crispin Odey, from the business following allegations of repeated sexual misconduct.
This development, shared with investors on Friday, represents a significant milestone in the winding down of Odey’s 32-year-old hedge fund. In addition, James Hanbury, the star fund manager, is currently engaged in advanced negotiations to transfer his portfolio to boutique advisory firm, Lancaster Investment Management.
According to a letter sent to clients on Friday and obtained by the Financial Times, the hedge fund firm has proposed a restructuring plan for Cayman Islands-based OEI Mac. This plan involves transferring shareholders’ investments to a new fund, which would then be housed under a different company.
Under this plan, Freddie Neave, a portfolio manager at Odey Asset Management, would oversee the new fund and subsequently leave the firm to work for the competitor. The new fund would maintain a similar investment objective and strategy as before.
Neave assumed responsibility for managing OEI Mac after Crispin Odey’s departure from the firm he founded in 1991.
OEI Mac, one of the flagship funds established by Crispin Odey, was launched in February 1994 and had approximately $507 million under management earlier this year. In response to allegations against Crispin Odey, Odey Asset Management had to suspend withdrawals from this fund and other funds, leading to the ongoing struggle to contain the fallout. Crispin Odey vehemently denies these claims.
The allegations, detailed in an investigation by the Financial Times and involving 13 women, led several key banking partners to sever ties with Odey Asset Management. Consequently, the firm has faced regulatory scrutiny, prompting discussions about its breakup.
After two weeks of silence regarding potential buyers for certain funds, Odey Asset Management announced on Tuesday that it is in advanced talks with London-based investment boutique SW Mitchell Capital to transfer four funds and their manager, Oliver Kelton.
Furthermore, on Friday evening, Odey Asset Management informed clients of its advanced negotiations to relocate five funds managed by Hanbury to Lancaster, a partnership founded in 2007 and based in London.
These plans require approval from Odey Asset Management’s leadership, the fund boards, and regulators before Hanbury and potentially other staff members can join Lancaster. However, Lancaster has not yet responded regarding the hiring of additional Odey Asset Management personnel.
Odey Asset Management declined to comment further on this matter beyond the letter.
The proposed restructuring of OEI Mac will test investor support for Neave and the ability of the firm to effectively remove Crispin Odey from the strategies he previously oversaw. Crispin Odey had approximately $600 million of his personal investments managed by the firm.
The firm anticipates that Crispin Odey will not transfer his investments to the new fund. If the restructuring proposal does not receive adequate support, the alternative would be to compulsorily redeem investors in the fund, as stated in the client letter.
The firm is currently engaged in discussions with various existing service providers of the fund, including prime brokers, with the intention of appointing them to the new fund.
The Financial Conduct Authority has chosen not to comment on this matter.
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