RAB to return 79% of Special Situations cash

RAB Capital’s Special Situations fund is reportedly returning 79% of its investors’ money when the lock-up on it ends, marking an end to the uneasy relationship between the company’s $470m flagship and its shareholders.

It is understood RAB had prepared for 80% to leave, so is ready to meet all redemption requests. Those expected will leave it at about $100m in assets.

As the fund lost 73% in 2008 and was stuck in illiquid assets it bargained with investors to cut fees, if they agreed to commit for three years.

The vote was duly passed, however some investors resented the imposition, which ends in October.

One US investor who was gated when co-investors voted for the curbing said at the time that the allocation was “not RAB’s money to keep”, and they should return it.

Manager Philip Richards sold some of the illiquids, and moved the fund away from the unlisted investments that had helped him make 49% in 2004, and over 2500% between 1 January 2005 and April 2005.

Richards invested in small cap miners, which suffered badly as global trade plunged in the crunch, and holdings in Northern Rock and car racing franchises also performed poorly.

Despite refocusing the portfolio since the crunch, he lost money last year, investors said, but is now formally turning his back on unlisted, illiquid assets to invest only in listed companies in the natural resources sector.

RAB says the company’s full year revenue will take a 5% hit as a result of the shrinkage, but it will leave the London manager with only those investors who want to remain with the fund.

Other of RAB’s funds have performed well since the crisis, and it announced this week it will launch in April Ucits variants of its offshore natural resources fund and of its gold and precious metals portfolio.

Global Mining and Resources fund covers base, precious, steel and ferrous metals, as well as energy mining, and the regulated version will be available in sterling, euro, and US dollar classes, offering daily liquidity.

The RAB Gold and Precious Equities Ucits fund will seek equity opportunities in precious metals exploration and production, focusing on large to mid caps.

David Walker

Read more from David Walker

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