November 14, 2017 / 10:01 PM / 3 days ago

SkyBridge boss grouses over sale approval delay

NEW YORK (Reuters) - SkyBridge Capital LLC’s chief investment officer expressed disappointment at the U.S. government’s nearly year-long delay in approving the sale of the hedge fund investment firm to a consortium that includes a Chinese buyer, saying it had hurt business.

Raymond Nolte, Chief Investment Officer and Managing Partner at SkyBridge Capital LLC, speaks during the Reuters Global Investment Outlook Summit in New York, U.S., November 14, 2017. REUTERS/Mike Segar

“It’s frustrating that it’s taking this long,” Ray Nolte said on Tuesday at the Reuters Global 2018 Investment Outlook Summit in New York.

SkyBridge, best known for helping wealthy individuals invest in hedge funds, said in January it had signed a majority purchase agreement with RON Transatlantic EG and HNA Capital U.S., a subsidiary of Chinese conglomerate HNA Group.

SkyBridge founder Anthony Scaramucci planned to sell his stake so he could take a post in the administration of President Donald Trump.

Because of HNA’s Chinese roots, the deal was subject to approval from the Committee on Foreign Investment in the United States (CFIUS), which is led by the U.S. Treasury Department.

Nolte said SkyBridge had lost some clients because of “noise” around the deal and had also taken in less new capital with CFIUS approval in limbo. But he said the firm’s current asset base had stabilized.

“That’s all kind of off in the past now. People don’t seem to be reacting to it,” Nolte said. “We would just like to get this closed and move on with things.”

The New York-based firm had approximately $10.7 billion in assets under management or advisement as of Sept. 30, down from $12 billion as of Nov. 30, 2016.

Nolte said he has stopped trying to predict when CFIUS approval would come. He cited several theories on the reasons for the delay, including a high volume of deals for the committee to process, and the desire for the government to understand HNA’s complex ownership in light of a recent restructuring.

“For the life of us, we cannot identify how SkyBridge represents either a risk to the U.S. financial system or a risk to national security,” Nolte said.

Scaramucci, who was briefly White House communications director and is now launching a media endeavor called the Scaramucci Post, echoed the point in an email to Reuters late on Tuesday.

Raymond Nolte, Chief Investment Officer and Managing Partner at SkyBridge Capital LLC, speaks during the Reuters Global Investment Outlook Summit in New York, U.S., November 14, 2017. REUTERS/Mike Segar

“We fully expect the transaction to close as there are no national security issues for a transaction like this,” he wrote. “We recognize that the system is overwhelmed but see no reason to see why we can’t close before year end.”

A U.S. Treasury spokesperson declined to comment on the transaction, citing disclosure rules.

“CFIUS reviews focus on national security concerns and Treasury takes the role as Chair of CFIUS very seriously,” the spokesperson said in an emailed statement.

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HEDGE FUND INVESTMENTS

SkyBridge operated as usual this year following the departure of Scaramucci, said Nolte, who now leads the firm with top deputy Troy Gayeski.

The SkyBridge Multi-Adviser Hedge Fund Portfolios G fund has rebounded from small loses in 2015 and 2016 to gain an estimated 6.8 percent this year through October, according to information seen by Reuters.

Nolte said SkyBridge invests with between 25 and 30 hedge funds and has long avoided equity managers, an industry mainstay.

The firm has instead focused on more niche investments that yield steady cash streams, including securities tied to smaller banks called trust-preferreds, and commercial mortgage-backed securities. SkyBridge also has some investments in managers who aim to profit from corporate events.

According to a U.S. Securities and Exchange Commission report, top managers used by SkyBridge as of June 30 included Hildene Capital Management LLC, EJF Capital LLC and Solus Alternative Asset Management LP.

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For other news from Reuters Global Investment 2018 Outlook Summit, see: here

Reporting by Lawrence Delevingne and Svea Herbst; Editing by Susan Thomas and Leslie Adler

Our Standards:The Thomson Reuters Trust Principles.
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