New crisis could force RAB Capital to delist
Thursday 12 May 2011
Rab Capital, the former star hedge fund now notorious for investing in Northern Rock, is set to leave the stock market following a fresh wave of redemptions and the departure of a top fund manager.
The company said yesterday that its assets would drop further than expected and that returning to profit would now be a greater struggle. The board will decide whether to delist its shares from the Alternative Investment Market (AIM). The shares fell by 24 per cent to 7.75p in response to the news. At their peak in 2007, the shares were worth 126p.
RAB revealed in March that its one-time flagship Special Situations Fund would pay out 79 per cent to investors after it was hit by a wave of redemption requests. The company said at the time it had enough liquid assets to pay the money.
But yesterday RAB announced that redemptions had spread to other funds and that Gavin Wilson, who runs the high-performing RAB Energy and Octane funds, would leave "for personal reasons".
"As a consequence of these redemptions and events, and their impact on both the level and anticipated growth of assets in these strategies, overall assets are likely to move to a level below management's previous expectations," RAB said in a statement.
Yesterday's news could mark the end for a business that was once the star performer of London's hedge-fund scene during the pre-crisis boom. RAB's Special Situations Fund made billions for investors before 2008 by riding the commodities boom and investing in mining start-ups.
But it suffered losses during the recession on unlisted shares in businesses that had yet to float. The real turning point for RAB was the decision by the Special Situations Fund's manager, Philip Richards, to buy a stake in Northern Rock after the bank said it was running out of cash.
Mr Richards believed the shares would recover with Bank of England support but instead Northern Rock was nationalised, which had the result of wiping out his investment.
RAB never shook off the doubts that lingered after its punt on Northern Rock and Mr Richards, who gave away £3.25m, or nearly half his earnings, to Christian causes in 2006, became a reluctant emblem for the credit crunch.
Delisting the shares would give RAB the time to re-organise itself with less public scrutiny. The company said yesterday it was considering using some of its surplus capital to provide liquidity to shareholders.
- 1 Finland schools: Subjects scrapped and replaced with 'topics' as country reforms its education system
- 2 The West has it totally wrong on Lee Kuan Yew
- 3 #FreeTheNipple: Women in Iceland bare breasts in solidarity with trolled student
- 4 Scientists have discovered a simple way to cook rice that dramatically cuts the calories
- 5 Zayn Malik quits One Direction: Hundreds of workers request compassionate leave following band member's exit
Germanwings captain Patrick Sondenheimer tried to break into locked cockpit door 'with an axe' as plane was descending
Amanda Knox murder conviction: Italian court overturns verdict for US student and Raffaele Sollecito in the killing of Meredith Kercher
Saudi Arabia says it won't rule out building nuclear weapons
The battle for the Middle East's future begins in Yemen as Saudi Arabia jumps into the abyss
#FreeTheNipple: Women in Iceland bare breasts in solidarity with trolled student
Nigel Farage brands LGBT activists 'filth' and 'scum' and accuses them of scaring away his children after they invade his local pub
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
JK Rowling responds to fan tweeting she 'can't see' Dumbledore being gay
Russia threatens Denmark with nuclear weapons if it tries to join Nato defence shield
Jeremy Clarkson sacked live: Alan Yentob 'wouldn't rule out' ex Top Gear host's BBC return
Germanwings plane crash: Co-pilot Andreas Lubitz wanted to 'do something people would remember him for'
iJobs Money & Business
Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...
Negotiable: Recruitment Genius: You will be the first point of contact for all...
£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...
£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...