Lazard has closed its South Korea-focused activist hedge fund, while China International Capital Corporation (CICC) has done the same with its Asian long/short equity strategy, as the sector continues to be roiled by volatile markets and investor redemptions.
US investment bank Lazard confirmed to AsianInvestor that it recently wound up its Korea Corporate Governance Fund, which was launched in 2006 and attracted a $100 million allocation from Californian pension fund CalPERS in early 2008.
The strategy was touted as the first socially responsible investment fund in South Korea, targeting small and mid-size Korean firms at low valuations due to a weak governance structure. It was launched amid revelations of high-profile scandals involving executives at Samsung and Hyundai Motors.
A CalPERS document listed Lazard’s Korea fund as registering a -19.4% loss in 2011. It had returned 29.5% in 2010, 11% in 2009 and lost -40.83% in 2008. As at the end of last year, the fund had a market value of $67.8 million with a total of 19 investments, according to CalPERS, which invested in the strategy under its corporate governance programme.
The capacity of the vehicle was $600 million, at which the fund was to be closed to new capital. However, it apparently did not reach capacity. The fund had about $200 million in AUM at the end of 2007, which would have increased to $300 million with CalPERS’ investment the following year. Its 2008 performance loss would have nearly halved assets.
The management team for the fund included a six-person group that Lazard had poached from Deutsche Bank’s DWS mutual fund unit. Prominent South Korean corporate governance activist Jang Ha-Sung served as a special adviser.
Lazard clients seeking exposure to the market are being offered its Korean equities strategy which was launched in 2008, according to a firm spokesman.
Meanwhile, the Hong Kong-based offshore asset management unit of Chinese bank CICC has recently closed its Asia Fund, sources confirm to AsianInvestor. The offshore long/short equity vehicle was launched in early 2008. Although the CICC Asia Fund had a capacity of $500 million, industry executives say it was not actively marketed and remained small.
The closure of the fund is thought to be a way for CICC to clear the decks as it prepares to launch offshore vehicles in partnership with UK hedge fund giants Sloane Robinson and Brevan Howard.