Credit Suisse Group is caught in the fallout of hedge fund firm York Capital Management making big changes to its business.
Following a strategic review, York is winding down its European hedge fund business and spinning out its Asia operation into a new firm, according to a letter, dated November 23, that York sent to its investors. As a result, Credit Suisse said in a statement Tuesday that it expects to take a $450 million impairment on the non-controlling stake it has held in York since 2010.
Founded in New York in 1991, York expanded its U.S. based portfolio of hedge funds to operate in Europe and Asia, and has diversified into areas such private equity, private debt and collateralized loan obligations, according to the Credit Suisse statement. The bank said its investment in York represented about one percent of the CHF 438 billion (about $480 billion) of assets in Credit Suisse’s asset management business at the end of last year.
York is spinning out its Asian Opportunities Fund and related vehicles, which will be overseen by Masa Yamaguchi, according to the letter to investors. Yamaguchi has been the chief executive officer of the firm’s Asia business since 2014, his LinkedIn profile shows. After the spinout, York will remain invested in the business, the letter said.
Meanwhile, York is winding down its European hedge fund business — including its European Opportunities Fund and its European Focus Fund — because York’s co-managing partner and co-chief investment officer Christophe Aurand is leaving the firm on December 31, according to the letter. Aurand served as the co-portfolio manager for two of the firm’s European funds and two of its Asia funds, in addition to managing an event-driven UCITS fund, according to York’s website.
York will continue to manage its multi-strategy fund, but it will primarily manage internal capital, according to its letter.
In December 2019, Bloomberg reported that York planned to shutter its main credit hedge fund that managed almost $2 billion. A public document from the Arkansas Teacher Retirement System in February shows the hedge fund firm decided to liquidate its Opportunistic Credit Fund after receiving significant redemption requests. The pension fund disclosed in an April document that its board approved the redemption of its position in the fund.
York manages about $8.5 billion in longer duration credit and private equity strategies and plans to continue to raise drawdown vehicles with long commitment periods, according to its letter.
This year York announced that it raised an $800 million middle-market private equity fund focused on North America. The firm also collected $1.3 billion for a distressed asset fund, completing fundraising in 2020, according to the letter.