Fairfield Greenwich Group selected Sciens Capital Management from a group of eight finalists to restructure and assume management of four of its hedge fund of funds, according to a source who spoke on condition of anonymity.
Within the next few weeks, investors in the four funds will be asked to approve the restructuring and will have the choice of staying in the funds or redeeming their assets. Sciens manages three hedge funds and also makes investments in private equity, venture capital and structured finance vehicles that total $5 billion.
Terms of the arrangement are not known, but the source said Fairfield Greenwich will retain ownership and a portion of the revenue stream of the Chester Global Strategy, Chester Global Emerging Markets, Chester Horizons and Irongate Global funds.
The four funds assets total $2.5 billion, down from about $5 billion at the end of 2008. The source confirmed that all four funds were subject to heavy redemptions following news in December that Fairfield Greenwichs Sentry Fund had roughly $7 billion invested with Bernard L. Madoff Investment Securities, making it the largest investor swindled by Mr. Madoffs Ponzi scheme.
Fairfield Greenwich will continue to internally manage several small hedge funds of funds and hedged feeder funds as well as a third-party alternatives investment placement business, said the source.
Thomas Mulligan, a spokesman for Fairfield Greenwich, referred calls regarding the subadvisory deal to John P. Rigas, Sciens chairman and CEO, who did not return repeated calls for comment.