York Capital Management will spin out its $2.7 billion Asia unit and wind down its European hedge funds business as part of a wider shift in focus.
A letter to firmwide investors obtained by Pensions & Investments said that following a "careful and thoughtful strategic review," the business will now focus on longer duration assets including private equity, private debt and collateralized loan obligations. York Capital manages about $8.5 billion in longer duration credit and private equity strategies, including distressed assets, special opportunities and CLOs.
The letter — signed by CEO and Chairman Jamie Dinan — said York expects to offer similar strategies in the future "to seek to take advantage of expected continued dislocations in private and public markets. We feel particularly well-positioned to capitalize on the current opportunity sets in these asset classes."
The Asia unit, York Capital Management Asia (HK) Advisors, will be spun out from the wider business sometime next year, a separate letter to Asia clients said.
The new business will be called MY Alpha Management, and York will retain a "meaningful economic interest in the new entity, through a passive non-voting interesting, ensuring alignment of interests."
There will be no change to fund structures, domicile or the core investment management team.
The independent business will continue to be led by Masahiko Yamaguchi, CEO and CIO for Asia. Mark He, co-portfolio manager and head of Greater China, will be promoted to a partner.
In Europe, York will wind down its hedge fund business, including the York European Opportunities Fund and the York European Focus Fund, the letter to firmwide clients said. The firm will distribute a separate letter with details on the return of capital later this month.
A hedge fund presence will be maintained through the firm's multistrategy fund, although this will primarily run internal capital, the letter said. The firm will communicate with investors by early next month with additional details on each strategy's "expected path forward, including investor elections and the return of capital."
Other changes will see Christophe Aurand, co-managing partner and co-CIO, departing from the firm effective Dec. 31. William Vrattos will continue as sole CIO and managing partner of the firm.
Fraser Maingay, a partner focusing on European equities, will also leave York. Further details were not available.
The firmwide investor letter noted that 2020 has been "a year marked by tremendous upheaval and disruption. It is nearly impossible to find a single individual, market, sector or region that hasn't been impacted by the seismic changes occurring on a seemingly daily basis." It said that while York "has historically excelled during periods of significant dislocation, we are of course not immune to the shifts occurring beneath our feet."
A separate news release by Credit Suisse — which purchased a minority stake in York Capital Management in 2010 — said the firm intends to have a continuing interest in the Asia business once it is spun out next year.
Credit Suisse added that it expects to take a $450 million impairment to the valuation of its non-controlling interest.