Well, FGG’s still hanging in there longer than we thought, but the end is drawing nearer. The company just handed some of its remaining fund-of-fund products to Sciens Capital to manage.
Hedge Fund Alert: Fairfield Greenwich, which had more investor capital tied up with Bernard Madoff’s Ponzi scheme than any other firm, is turning over the bulk of its fund-of-funds business to Sciens Capital.
While the exact terms of the transaction are unknown, Sciens will initially advise New York-based Fairfield as it restructures four funds of hedge funds whose combined assets under management have fallen to about $2.5 billion, from a peak of $5 billion last year. Assuming investors sign off on the restructuring plan, Sciens would then take over management of the funds, sharing some of the fee revenue with Fairfield.
Because no money is changing hands, the deal isn’t being described as a sale. However, Sciens eventually is expected to have complete control over the business and to rename the funds. Fairfield will retain a stake in the business. Together, the four funds of funds invest in about 40 hedge funds…
The deal with Sciens leaves Fairfield with a fraction of the business it once ran. Sciens will gain control over Fairfield’s Chester Global Strategy, Chester Global Emerging Markets, Chester Horizons and Irongate Global funds. Fairfield, meanwhile, will retain a few small funds of funds, some feeder funds and a placement business, which raises investor capital on behalf of other firms. One of Fairfield’s feeder funds, called Sentry, funneled some $7 billion of investor equity to Madoff over the years, making it the single-biggest casualty of the fraud scheme.