Citigroup Inc. is closing a $400 million convertible arbitrage fund — the final step in winding down its $2 billion Tribeca Global Investments, people familiar with the plans said.
Tribeca Convertible LP has been hurt by investor redemptions, according to the people, who asked not to be identified, because the decision has not been made public. The fund's managers, Andrew Wang and Jeffry Chmielewski, are likely to leave Citi and are contemplating starting their own fund, the people said.
Tribeca Global was set up in 2004 with a goal of attracting as much as $20 billion.
Citi is struggling with its alternative asset management unit. In June it shuttered Old Lane Partners LP, the hedge fund business that Vikram Pandit, Citi's chief executive, co-founded and sold to the New York company last year. In March it started closing its Falcon Strategies hedge funds after suspending redemptions.
Tribeca Convertible's primary strategy was investing in U.S. and foreign stocks and "equity-related securities" using "convertible securities arbitrage," according to a regulatory filing in April by MetLife Inc., which had holdings in the fund as recently as 2006. Convertible arbitrage involves buying a company's bonds that can be converted into common stock while shorting its shares.
Citi said in September that it would close Tribeca Global and return money to clients. About $400 million of convertible and Asian securities would remain invested within Citigroup Alternatives, the company said at the time.
This year Tribeca Convertible has fallen less than 5%, people familiar with the fund said. The Fixed Income-Convertible Arbitrage Index had dropped 6.7%, according to Hedge Fund Research Inc.
The fund rose 20% in 2006 and 5% in 2007.
A Citi spokesman would not discuss the matter or make Mr. Wang and Mr. Chmielewski available. for interviews.
