CQS deal with spinoff team falls apart

A deal between Michael Hintze's CQS and its equity hedge fund spinoff has collapsed as the billionaire renews focus on his core credit investing roots in a turbulent year marred by record losses.

CQS was to take an equity stake in the business — Landseer Asset Management — and allocate some capital to it. But Mr. Hintze's firm and Landseer, led by former CQS head of equities Paul Graham, have now abandoned the plan, according to people with knowledge of the matter.

Landseer instead went ahead alone and started an equities long-short hedge fund in October managed by Andrew Billett, the people said, asking not to be identified because the information is private. Mr. Billett was hired by CQS earlier this year to start such a fund.

Spokesmen for CQS and Landseer declined to comment.

Mr. Hintze, who made a name for himself by building one of the largest hedge funds in Europe, is struggling to bounce back from losses suffered during the early part of the coronavirus pandemic when his structured credit bets imploded. His CQS Directional Opportunities fund was down 41.6% through October this year.

CQS manages almost $19 billion of assets, which are currently stable thanks to a low-margin but growing long-only investing business. Still, the firm has moved to cut costs, reduce staff, roll back an ambitious expansion plan and refocus its attention on fixing its main credit trading hedge funds.

Mr. Hintze has also stepped up succession planning. Earlier this month, he disclosed plans to form a group of senior partners to share higher equity stakes and develop a firmwide strategy.

Former AlphaGen Capital CEO Graham joined the firm in January, along with Roger Guy, who was hired by the equities business as a senior adviser and non-executive chair. Mr. Billett's team moved to CQS from Arrowgrass Capital Partners as part of the expansion plan of Xavier Rolet, who stepped down as CEO in January after just a year in the job.

Following sharp losses at two of CQS's funds in March, the firm decided to spin off the nascent equities hedge fund business, which was yet to start its first fund.