06/30/2010

Hall's Astenbeck Pulls Back on Fund Raising

Andrew Hall's Astenbeck Capital is getting ready to close its doors to new investors within the next few months.

Hall, a legendary energy trader best known as head of the big commodity manager Phibro, has raised nearly $1.1 billion for his Astenbeck Offshore Commodities Fund 2 since launching in January 2008. That's more than his early backers expected him to raise, so Hall is now planning a "soft close" by the end of the summer, several investors said. The arrangement will allow existing limited partners to increase their stakes if they choose to do so, but bar new investors - probably until sometime next year.

Hall continues to run New York-based Phibro, which was a unit of Citigroup until Occidental Petroleum bought the business last year for about $370 million. Occidental also owns a 20% stake in Astenbeck.

Hall set up Astenbeck in New York at the beginning of this year to take over management of two Phibro funds - Phibro Offshore Commodities Fund 2 and a U.S.-domiciled version - that have since been rebranded as Astenbeck vehicles. Hall's plan for a "soft close" applies both to the offshore and onshore versions of the fund.

Astenbeck Offshore Commodities Fund 2 includes $50 million of Hall's own money and capital from 37 other investors, according to a June 21 SEC filing. The fund has an unusually high minimum investment of $25 million.

Hall's decision to stop marketing Astenbeck stemmed mainly from pressure from investors who felt the fund had grown too large. But unusually choppy market conditions also were a factor. The offshore fund was down nearly 10% this year through May - a period when many other large commodity managers also had trouble. The HFRX Commodity index was down 4.9% through May.

When Citi owned Phibro, Hall was credited with generating outsized returns for the bank - and scrutinized for pocketing outsized bonuses. His compensation package for 2008 totaled around $100 million, which led to sharp criticism of Citi for doling out huge bonuses at a time when the company was being bailed out by U.S. taxpayers.

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