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Distressed-debt hedge fund Archview said to be shutting down
[NEW YORK] Archview Investment Group LP became the latest distressed-debt hedge fund to close its doors, according to people with knowledge of the matter.
The firm founded by former heads of Citigroup Inc's distressed-debt team will start returning money to investors after the end of the year, the people said, asking not to be identified because the information isn't public. Archview, which counts Blackstone Group LP among its bigger investors, posted gains of 5.3 per cent this year with assets of about US$650 million, one of the people said.
Jeff Jacob, one of Archview's founders, will be joining Marathon Asset Management LP, where he'll co-head the US$14 billion hedge-fund firm's opportunistic credit strategies, the people said. Mr Jacob declined to comment on the fund's closure. Representatives for Marathon and Blackstone also declined to comment.
Distressed-debt hedge funds have found few opportunities as credit markets remained open to some of the most troubled companies. That's made it harder to outperform index funds, and to persuade investors to stick with funds that come with a steep fee until the credit cycle turns.
Small Scale Archview's assets peaked at a little under US$900 million, according to SEC filings. Archview's inability to scale its assets was one of the reasons behind the founders decision to shutter the fund, two of the people said.
Jacob and John Humphrey, who set up Citigroup's global special situations group, left the bank in 2008 with almost half of that unit to start Archview as a distressed-debt investor. Blackstone and Citigroup seeded the venture, which started with about US$200 million in assets. Peter Grauer, chairman of Bloomberg LP, is a non-executive director at Blackstone.
Blackstone helped finance Archview from a new investment pool that backed startup hedge funds at the time. Blackstone remained one of the larger investors at Archview, which posted annualized gains of 6.7 per cent since inception, one of the people said.
While Archview's performance was in line with its peers this year, typical S&P 500 index funds have soared more than 20 per cent in 2017.
Jacob and Humphrey had worked together since 1995. Before setting up the special situations group at Citi, Jacob led distressed-debt trading at the bank and held a similar role at Merrill Lynch & Co. Humphrey also had led Citi's distressed research group after holding that title at Merrill Lynch as well.
Jacob will co-lead Marathon's opportunistic credit strategies team with Vijay Srinivasan and report to Marathon Co-founder and Chief Investment Officer Lou Hanover, one of the people said.