$5B Hedge Funds-of-Funds Aurora to Liquidate

The Chicago-based hedge fund investor said it would return capital to clients after an acquisition deal fell through last week.

Aurora Investment Management is winding down and will return $5 billion to its investors, the firm confirmed to CIO.

The Chicago-based hedge funds-of-funds manager said it was in the process of contacting investors, and would retain an internal group during the capital-return process.

“Allocations to the industry have declined and new strategies have evolved, which has made it more difficult to maintain the scale needed to best serve investors.”“After considering a range of strategic alternatives, we have determined the best course of action to ensure fair and equitable treatment for Aurora’s investors is to return their capital,” Ted Meyer, spokesperson for Aurora’s parent company Natixis Global Asset Management, said. 

The announcement follows the termination of an acquisition deal which would have seen Northern Trust’s 50 South Capital Advisors take ownership of Aurora. 

At the time the deal was struck in March, Northern Trust Asset Management’s president said Aurora’s clients and staff would have deepened the firm’s “expertise in providing alternative investment solutions that combine unique manager sources of alpha with strong risk management and oversight.”

The time frame for Aurora’s liquidation has not been officially announced.

“Allocations to the industry have declined and new strategies have evolved in the 28 years since Aurora was founded, which has made it more difficult to maintain the scale needed to best serve investors,” Meyer continued.

Aurora is the latest in a string of hedge funds to close. 

In February, Carlyle announced it would shut down its hedge fund-of-funds subsidiary Diversified Global Asset Management two years after purchasing it. 

“Unfortunately, the challenging market environment made it difficult to scale in fund-of-hedge funds and liquid alternatives,” said Carlyle’s spokesperson at the time of the closure.

London-based Nevsky Capital also said in January it would close its flagship $1.5 billion long-short fund and return cash to its investors. BlueCrest Capital Management also announced last December it would return $8 billion of capital and turn into a family office, blaming changing fee levels and the challenge of meeting investor needs.

Related: Carlyle to Close Hedge Fund-of-Funds Arm; Hedge Fund Liquidations: Shakeout or Blip?; BlueCrest to Return $8B, Become Family Office