Two London-based hedge funds – Kite Lake Capital Management and Astaris – are preparing to close their doors to new investors, even as the broader hedge fund industry is facing significant capital outflows amounting to tens of billions of dollars, according to a report by Bloomberg.
Kite Lake has announced it will cease accepting new investments into its flagship $1.4bn KL Special Opportunities Fund from 1 October, as detailed in an investor letter and confirmed by a source familiar with the situation.
Similarly, Martin Beck’s $650m Astaris Special Situations Master Fund, which counts Blackstone Inc among its investors, is expected to close to new capital once it reaches €1bn ($1.1bn) in assets, according to another insider.
Both Kite Lake and Astaris representatives declined to comment, although hedge funds often restrict new capital inflows to avoid managing excessive assets, which can hinder their flexibility and potentially impact returns.
Kite Lake, founded in 2011, reopened its main fund to new investments on 1 December, managing approximately $2bn in total assets. The firm has maintained positive annual returns since its inception, with a 6.9% increase through July, according to the investor letter.
Martin Beck, who previously served as a senior analyst at Centerbridge Partners Europe, launched his hedge fund in 2020 with $85m, focusing on distressed companies. He now manages around $750m, including a closed-end fund initially backed by Blackstone.
The Astaris Special Situations fund has posted a 9.3% gain through July, while its Capital Partners Fund I has surged by 19.5%, as per investor letters obtained by Bloomberg.
The decisions to close to new investments come as many funds are struggling to attract new money. According to data from eVestment, investors withdrew a net $216bn from hedge funds between 2022 and 2023, with an additional $39bn being pulled out by May of this year. This exodus has led to the closure of over 1,000 hedge funds since early 2022, with more shutting down than launching, as reported by Hedge Fund Research Inc.
