Exclusive: Hedge fund Portman Square scales back, CEO steps down - sources

Wed Mar 6, 2013 4:26pm EST
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By Tommy Wilkes and Martin de Sa'Pinto

LONDON/ZURICH (Reuters) - The chief executive of one of Europe's most talked-about new hedge fund firms has stepped down in a bid to save costs after a big investor pulled its support, people familiar with the situation said.

London-based Portman Square Capital was founded by Citigroup's former head of proprietary trading Sutesh Sharma last year but is yet to start trading. It has scaled back funding plans to $200 million from an original $500 million target, said two sources who spoke on the condition of anonymity because of the sensitivity of the matter.

The smaller asset base has forced Portman to review its fixed costs and it has concluded it can no longer afford to keep Andrew Mack, formerly of Morgan Stanley, as CEO after just five months in the job.

Mack, who stepped down as CEO this week after joining the company in September, will remain at the firm in an advisory role, a Portman spokeswoman confirmed. She declined to comment on the fund's asset raising or expected launch date.

Last month portfolio manager Paul Godfrey left Portman after the hedge fund decided to narrow its trading strategy, the two sources also said, although the fund will continue to trade a range of assets.

Portman's fortunes underline the tough times for new hedge funds as investors choose to put their cash in bigger, established managers. Some prominent start-ups have also shut down after failing to make money.

Portman has its origins in Old Lane Partners, a $4.5 billion hedge fund Sharma co-founded with ex-Citi CEO Vikram Pandit. The decision to scale back its fundraising target is a far cry from the success some Portman members enjoyed at that firm.

Old Lane landed Pandit with $165 million personally when he sold the firm to Citi in July 2007 for $800 million.   Continued...