Avendus Capital winds down hedge fund strategy; Andrew Holland to leave firm

KKR-backed Avendus Capital is winding down its hedge funds, a move that will see market veteran Andrew Holland leave the firm, two people with knowledge of the development told Mint on condition of anonymity.

The two funds Avendus Absolute Return and Avendus Enhanced Return funds have already started returning money to their investors and the process of winding down is expected to be completed by February, the first person cited above said.

The firm’s ambitions for its hedge fund strategy did not achieve scale as envisaged because of tax and regulatory reasons, the person added. Sebi’s introduction of New Asset Class scheme in October also made the strategy harder to sell, the people cited above said.

Focus shift

However, Avendus will retain its long-only public equities portfolio management scheme (PMS) under Ganesh Jayraman. It will also retain its credit fund and future leaders fund series. 

“While our strategies in structured credit, private equity and long-only public markets continue to garner significant investor interest, our hedge funds haven’t seen as much traction. After careful strategic review and with our investors’ best interests in mind, we have taken steps to realign our offerings in the asset management space, in keeping with evolving market dynamics. We have decided to wind down our hedge funds business and concentrate our efforts on expanding the aforementioned strategies within Avendus Asset Management,” an Avendus Capital spokesperson told Mint.

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“Mr. Andrew Holland, CEO, Avendus Capital Public Markets Alternate Strategies LLP, who played a pivotal role in shaping our hedge fund business, would be transitioning out of the firm. We deeply appreciate his significant contributions to Avendus and wish him continued success in his future endeavors,” the firm added. 

The two funds in question had assets under management (AUM) of around ₹2,000 crore. The Avendus Absolute Return Fund had an AUM of ₹1,028 crore till 31 December 2024, according to Sebi filings. Avendus Enhance Return AUM stood at ₹620 crore while Avendus Enhanced Return Series II had an AUM of ₹320 crore.

Avendus Capital hired Holland from Ambit Capital in 2016 to run its hedge fund business as part of its strategy to build out its asset management business. In 2017, it acquired UK-based Ocean Dial Asset Management and early stage tech-focussed private equity firm Zodius Capital to bolster its asset management business.

However, in subsequent years, Avendus Capital exited its interests in Ocean Dial and Zodius Capital.

Earlier this month, Avendus announced the launch of its third private credit fund ASCF III, with a target size of ₹4,000 crore and the first close of its Future Leaders Fund III, which was launched in May 2024. 

Avendus Capital, most known for its flagship investment banking business, also owns a wealth management business. Private equity firm KKR, which owns 60% stake in the company, along with some shareholders have been in talks with multiple bidders to sell their stakes, as Mint has reported.

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