Millennium Management, the hedge fund owned by Israel Englander, plans to refund $ 15 billion to its investors by year-end. This step is to create a more stable and long-term capital base.
The Millennium which has been returning its investors’ money since 2018, now wants to return a particular share class redeemable in full over the next year. The money which it intends to refund is so big that it exceeds the assets of many hedged funds operating in the market today.
However, as per Bloomberg News, the company is simultaneously raising $10 billion for a new longer tranche that extends to five years for full redemption in installments. The money which is refunded now to investors can be reinvested in the longer-term share class if the investors want.
The new $10 billion tranche will have long-term capital that is about 75% of the total assets of Millennium capital that includes around $ 8 billion to Englander and the employees.
Millennium Management has been looking for ways to have capital with a longer lock-in period. Three years ago, it had extended the redemption period for its clients. The executives of Millennium see long-term stable capital as a way to retain investment professionals and make internal capex such as technology upgrades.
A spokesman for Millennium Management declined to comment on this development.
The hedge fund has grown 10.9 % this year. Its steady returns over its three decades of track record make it easier to convince the investors about the new share class it is offering now.
The investors can redeem the new pledged capital in three years with a 5% withdrawal every quarter, which will take five years for total redemption.
Millennium has raised $7 billion in October, beginning according to its investors, another $3 billion is expected by Jan 1. In 2020, it had raised $6 billion in long cash.
