Hedge fund Ivaldi is said to shutter as top investor leaves

LONDON (Bloomberg) - Ivaldi Capital, founded in 2009 by three former Citigroup prime brokers, is shutting down after its largest investor pulled out, according to a person with knowledge of the matter.

The hedge-fund manager led by chief investment officer Will Potts will close both its London and Singapore offices, the person said, asking not to be identified because the information isn't public.

Ivaldi's closure underscores the risks faced by hedge funds exposed to a single large investor and makes the firm the latest in a series of money managers to return capital to clients.

While the number of hedge funds shutting operations declined last year, there were still 66 more shops closing than starting up, Eurekahedge data show.

"It's always very dangerous to build a business around one big investor," said Dariush Aryeh, CIO of investment adviser Fundana's fund-of-funds. "A well-diversified investor base is a must for a good hedge fund to last."

Ivaldi, which started with backing from an unidentified Swedish pension fund, managed about US$3.5 billion at its peak in September 2014, the person with knowledge of the closure said.

The decision to shutter the hedge fund wasn't performance-related, the person said.

The firm, which employs about 28 people, returned 13 per cent in its flagship money pool last year, they said, beating the 8 per cent gain in the Eurekahedge hedge-fund index.

Ivaldi deployed a long-short strategy, and its closure may come as a surprise to some because peers wagering on both rising and falling share values last year posted their best annual gain since 2013.

They also raised the most money of any hedge-fund strategy, according to eVestment.