Origami Scoops Up Cambridge Place Shares

Origami Capital, which buys illiquid hedge fund stakes on the secondary market, has acquired 40% of the shares in Cambridge Place Investment's three remaining funds.

The vehicles - CPIM Structured Credit Fund 20, 1000 and 1500 - have a combined $230 million under management. With permission from Cambridge Place, Chicago-based Origami issued a tender offer to all of the funds' investors, and in the end reached deals to acquire $92 million of shares at undisclosed discounts. Sellers included funds of hedge funds and institutional investors.

The deal - a large one by secondary-market standards - comes on the heels of a potentially much larger transaction between Origami and investors in fund-of-funds manager Union Bancaire Privee. Origami made a $1 billion tender offer to UBP investors, but the deal fell through about a month ago.

The three Cambridge Place funds invested in U.S. and European commercial and residential mortgage-backed securities, including a large chunk of subprime home loans, with a long-biased strategy that included some shorting of related indexes. The funds were named for their target returns - CPIM Structured Credit Funds 20 for 20 bp over Libor; 1000 for Libor plus 10 percentage points; and 1500 for 15 percentage points over Libor.

The London firm has been unwinding the vehicles since suspending redemptions in late 2007. The funds are expected to complete the liquidation process within about two years. Origami plans to retain its shares in the funds until they're fully liquidated.

Origami was founded in 2008 by Jeffrey Young and Thomas Elden, whose father, Richard Elden, is credited with creating the first U.S. fund of funds, Grosvenor Capital, in 1971.

Origami was in the final stages of a plan to buy shares in liquidating funds of funds managed by UBP when the deal unraveled. The firm has made similar offers in the past to pay up to $500 million for secondary-market stakes. To date, the upper limit for a single-buyer acquisition on the secondary market is about $100 million, measured by purchase price.

Cambridge Place, which is led by veteran asset-backed securities traders Martin Finegold and Bob Kramer, had about $3.8 billion under management in February, down from $8.1 billion on April 30, 2008. Aside from the hedge funds, the firm manages collateralized debt obligations that are now in run-off mode.

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