Illiquids, redemptions bedevil Stark's purchase of Deephaven.
Mon Mar 30, 2009
Stark Investments' agreement to purchase the assets of the
troubled Deephaven Capital Management on the cheap - for an
initial $7.3 million - was seen as a strategic triumph when the
deal was announced in late January. After all, the agreement
gave the $8.5 billion Stark the right to manage Deephaven's
funds (as well as ownership of most of the physical assets of
the investment management firm).
Tactically, however, the deal has been challenging to
implement as both Deephaven and Stark investors voiced concern
over differences in the firms' valuation policies and worried
about the sizable portion of illiquid assets in both firms'
portfolios. The significant redemption requests Stark received
for March 31 have further complicated matters as the firm has
decided to fund redemption requests with both cash and in-kind
ISSN: 2151-1845 / CDC10004H
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