Ritchie Capital shareholders approved a restructuring plan for the firm's flagship Multi-Strategy hedge fund. About 90% of shareholders participated in the voting and 92% of them approved the firm's plan to create a timetable for orderly redemption of assets from the fund, according to a company statement.
Thane Ritchie, founder and CEO, told investors last week that the fund could be liquidated if shareholders did not approve the plan, according to press reports.
The restructuring plan "developed with our investors provides a solution to balance the needs of remaining and redeeming investors and will enable us to create value in opportunities where we have an edge," said Mr. Ritchie in the statement.
The plan creates two share classes in the hedge fund: an equity class that carries a 3.25-year lockup and a redeeming class that provides gradual redemption of assets over a 2.5-year period, according to the statement.
The new terms were negotiated to pacify Ritchie investors who besieged the company with redemption requests after the firm imposed longer lock-ups last September to accommodate more investments in private equity and other less liquid investments, said Justin Meise, a spokesman. The old terms imposed a quarterly limit on redemptions of 10% of assets and a redemption fee of 3% in the first year of the investment, with no redemption fee in subsequent years, Mr. Meise said. The charges were 6% in the first year, 4% in the second and 2% in the third. Mr. Meise declined to provide the size or performance of the Multi-Strategy Fund and the total of requested redemptions. Ritchie Capital manages a total of $2.8 billion, he said.
The changes will make sure the Multi-Strategy Fund has committed capital to preserve the value of its investments; addresses the concerns of redeeming investors; and removes uncertainty regarding the capital flows of the firm, according to the statement.