#Greylock, one of the best-known #EmergingMarkets #Debt #HedgeFunds, Finds Itself at Similar Crossroads As Its Previous Targets, #Bankruptcy

Some 25 years after its founding, the firm -- its assets headed to a mere $350 million or so by the end of March -- on Sunday filed for bankruptcy protection in New York

Argentina, Mozambique, Barbados and the Republic of Congo have two things in common: They’ve all restructured their debt, and they’ve all tangled with Greylock Capital Management.

Now Greylock, one of the best-known hedge funds in emerging markets investing, finds itself at a similar crossroads. Some 25 years after its founding, the firm -- its assets headed to a mere $350 million or so by the end of March -- on Sunday filed for bankruptcy protection in New York. The firm is seeking to end its lease in midtown Manhattan after investors pulled their money following three years of losses, most recently stemming from the pandemic.

It’s a humbling turnaround for the hedge fund, which made a name for itself for its deep expertise and as one of the more outspoken firms in the emerging-market space, punching well above its weight. While the firm has no plans to shut down, it’s operating at a fraction of its former self: a staff of nine, down from 21 in 2017, and assets at about 30% of their $1.1 billion peak. Paying $100,000 in monthly rent for now-unused Manhattan offices was becoming untenable.
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Altogether, Greylock’s partners have participated in over 50 creditor committees in more than 30 countries, dating back to the 1980s and early 1990s, including restructuring the debt of several countries into Brady Bonds.

Its more notable deals include Greece, where Greylock was the only U.S. creditor on the steering committee to negotiate the nation’s debt restructuring. The hedge fund also co-chaired a steering committee before Argentina’s notorious 2005 debt restructuring, and was among bondholders that rejected that 30-cent offer. The firm’s partners have been involved with no less than five workouts in Argentina.
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Poor Performance

The firm was digging itself out of 3% losses in 2019 from private credit trades gone awry and tighter oil sanctions that pummeled Venezuelan debt when the Covid-19 pandemic hit. The flagship fund plunged about 14% last year as the virus slammed risk assets. Losses were led by Argentina and Venezuela, while the firm continued to write off some private credit trades, according to Mediratta.

Investor withdrawals were mostly spurred by the poor performance. The firm was stung by one particularly large withdrawal by an institution concerned with socially responsible investing that didn’t like the optics of being invested in countries such as Mozambique.

In the absence of new money, assets will drop to about $350 million at the end of March. Despite the recent losses, Greylock’s flagship fund has had annualized returns of 11% since its inception, beating the average hedge fund and JPMorgan Chase & Co.’s benchmark emerging-market debt index over the same span.

See the whole piece on Bloomberg here: 
For Shrinking Greylock Hedge Fund, $100,000-a-Month Rent Proved Too Much