Hedge Fund Och-Ziff Considered Sale of Part of Firm
August 18 2016 - 5:10PM
Dow Jones News
The largest publicly traded hedge-fund firm in the U.S. explored
a partial sale earlier this year, yet another sign of the difficult
choices facing the troubled industry.
Och-Ziff Capital Management Group LLC representatives spoke to
private-equity firms and asset managers including Pacific
Investment Management Co. about buying part of Och-Ziff's business,
making a so-called strategic investment in the firm or pursuing a
joint venture, people familiar with the matter said.
The talks are no longer active, some of the people said.
"We are not contemplating selling any part of the firm or any
other strategic transactions," Och-Ziff spokesman Joe Snodgrass
said. A Pimco spokeswoman declined to comment.
Och-Ziff considered the sale as it faced a five-year
international bribery investigation in countries including Libya
and client withdrawals. Investors have pulled billions from the
firm in recent months, and Och-Ziff said in its most recent
earnings report "this trend will likely continue to some extent for
some period of time."
Hedge funds are under pressure from all corners, with unhappy
clients demanding their money back amid years of poor
performance.
Och-Ziff has additional troubles. The Wall Street Journal
earlier reported that the Justice Department is pushing Och-Ziff to
agree to a criminal guilty plea. The firm said in its
second-quarter earnings report that it set aside more-than $400
million to resolve the bribery investigations.
Och-Ziff stock was down 37% this year through Wednesday. The
stock was up nearly 7% Thursday as The Journal reported the firm's
earlier consideration of a stake sale.
Och-Ziff ultimately decided to shore up support internally
instead of seeking help from potential buyers or investors, a
person familiar with the matter said. In its second-quarter
earnings report Och-Ziff said its partners, who include chairman
Daniel Och, are likely to invest up to $500 million into the firm
while deferring any repayment or dividend for at least three
years.
That money would be earmarked in part toward the Justice
Department bribery investigation and a related Securities and
Exchange Commission query, the firm said.
Mr. Och, 55, retains majority decision-making power at Och-Ziff
through his 60% ownership of the company's voting shares, as he has
since the firm went public in 2007. Och-Ziff has $39 billion of
assets under management.
Write to Rob Copeland at rob.copeland@wsj.com and Sarah Krouse
at sarah.krouse@wsj.com
(END) Dow Jones Newswires
August 18, 2016 16:55 ET (20:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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