Elliott Management Bulking Up on Cash

September 22, 2019 | Activist Updates, Hedge Funds

Paul Singer’s Elliott Management, fearing a market meltdown, is raising fresh money from investors.

Activist investor Elliott Management could raise a war chest of $5 billion, according to an investor. Recall also that in 2017 the fund raised that same amount in just 24 hours. So formidable is Mr. Singer’s investing prowess that investors were happy to pay the full rate of 2-and-20.

Why now?

Elliott Management, now a $38.3 billion fund, is just fresh from raising a $2 billion co-investment fund last month. That fund will focus on taking companies private.

The current fund-raising round may be targeting new investment opportunities. However, Mr. Singer is looking to raise liquidity for another reason, perhaps – a market crash.

In April he said vast amounts of debt had turned up the risk in the global financial system. “Global debt is at an all-time high, derivatives are at an all-time high, and it took all of this monetary ease to get to where we are today.”

Activist investor Elliott Management to use drawdown structure

The fund will use a drawdown structure for the new fund-raising. In this model, investors do not have to pay the entire commitment upfront. They are required to pay as and when the fund finds deployment opportunities and calls up for their share. However, no fees are payable until such time.

According to data from Lazard, activist investor Elliott Management invested $3.4 billion in the first half of 2019. That earned the fund the honor of being the most active activist.

Elliott Management is currently in a tussle with AT&T, calling for divestment of its DirecTV unit. Previously, he was reported to be eyeing Barnes & Noble.

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