Och-Ziff Capital Management Group’s aggregate assets under management as of June 30 was $42 billion, down 2.7% from three months earlier and a decline of 12.5% from a year ago, showed the firm’s second-quarter earnings report released Tuesday.
Assets managed in Och-Ziff’s multistrategy hedge funds experienced the largest declines among the firm’s four primary alternative investment strategy categories, dropping 5.1% in the quarter and falling 20.9% to $26.2 billion in the year ended June 30. The decline in multistrategy hedge fund assets for the one-year period was due to $4.9 billion of net outflows and $2 billion of underperformance, according to the earnings report.
By contrast, the OZ real estate funds saw combined asset gains of 4.8% in the quarter and 10% in the year to $2.2 billion as of June 30.
Asset growth in the firm’s credit opportunities hedge funds and institutional credit strategies were flat in the quarter, but were positive in the year ended June 30. The OZ institutional credit strategies rose 9.1% to $7.2 billion over the year while the credit hedge funds rose 2% to $5.2 billion.
Och-Ziff’s “other” investment category had flat asset growth for the three months ended June 30 and fell 7.7% to $1.2 billion for the year.
Och-Ziff’s multistrategy hedge funds produced negative net performance for the six months ended June 30: OZ Master Fund, -2.1%; OZ Asia Master Fund, -3.8%; OZ Europe Master Fund, -1.7%; OZ Enhanced Master Fund, -4.2%; and Och-Ziff European Multi-Strategy UCITS Fund, -5.7%.
The OZ Credit Opportunities Master Fund was up a net 4.4% year-to-date June 30, while the Customized Credit Focused Platform was up a net 4.2%.
June 30 performance information was not available for the firm’s institutional credit or real estate funds.
“Credit remains a bright spot for us, with distinctive performance on both an absolute and relative basis,” said Daniel S. Och, chairman and CEO, in the earnings report.
“We also continue to take advantage of the strong capital flows into real estate by actively monetizing investments from our earlier funds at attractive valuations,” Mr. Och added.
Och-Ziff has been the subject of a long-running federal investigation under the Foreign Corrupt Practices Act into allegations of bribery involving Libya's sovereign wealth fund and in the latest earnings report, said it has built a reserve of $414.3 million as of June 30 “in anticipation of a monetary settlement.”
The firm also said in the report that some of its executive managing directors are discussing a potential financing transaction of up to $500 million of perpetual preferred units with a special committee of Och-Ziff’s board of directors. The proceeds from the transaction would be used to fund the monetary settlement “related to resolution of the investigation and for general corporate purposes,” according to the report.