A1GP: Hedge fund investor posts second consecutive loss

By LJ Hutchins

CalendarTuesday, August 4th, 2009

 
 

RAB Capital, a London-based hedge fund management company and major shareholder in A1GP, has posted interim results that show profits dipping into the red and the assets under its management shrinking by nearly a third.

It comes at a time when sizeable questions remain over whether the series, which RAB Capital bought into in 2006, has the funding to run its planned fifth season.

A1GP plans to kick the season off in October at the Nitro SuperGP on Queensland’s Gold Coast, formerly a Champ Car race that was not continued by the IndyCar Series after the merger between the two championships. A publicity event in July saw a 24-strong parachute drop in support of it.

But, with the UK branch of the company wound up by creditors, the calendar said to be approved by the FIA but not fully announced, and few signs of team preparations under way, worried fans are wondering whether or not they will be seeing any racing.

That is in addition to Team GBR going into administration due to cashflow problems with no news about who might take over the franchise for season five.

RAB Capital’s current problems stem from the fact that it was one of the biggest investors in Northern Rock Plc, the UK-based bank that was taken into public ownership in February 2008 to halt its collapse.

According to a report in The Telegraph, the group made a pre-tax loss of £2.75m in the six months to June, compared with a profit of £8.7m in the same period a year earlier as lower management and performance fees hit revenues. Read the full story here.

The company runs a number of different funds. The one associated with A1GP, the Special Situations Fund, lost nearly 75 per cent of its value in 2008 plus a further five per cent in the first six months of 2009.

A report for Bloomberg News says: “RAB Special Situations was hurt by bets on Northern Rock Plc… RAB yesterday lost [a] court bid seeking compensation from the British government for stock they claim was rendered worthless when the Newcastle, England-based lender was nationalised last year.

“The fund was also hurt by its investments on natural resource companies and a private-equity stake in A1GP, a rival to Formula One, whose UK unit went into administration in March. Richards stepped down last year as CEO to focus of running the fund and a separate fund called RAB Global Mining Strategies.” Read the full report here.

Richards, in his former role as CEO, took the original decision to invest in A1GP in 2006, when he bought a majority holding in the series from its founder Sheikh Maktoum Hasher Al Maktoum.

RAB’s chief executive Stephen Couttie said in his statement to investors: “We understand that the Board of the RAB Special Situations Fund and the General Partner of RAB Special Situations LP will be writing to investors towards the end of the third quarter to provide a fuller update on the improving liquidity of their respective entities.

“Overall, while acknowledging the difficulties that may have arisen following the fund boards’ restructuring proposals, we are convinced that these measures are already being validated and will result in improved long term value for shareholders.” Read his full statement here.

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