Billionaire Michael Hintze’s CQS is exploring options including selling part of its asset-management business, according to people with knowledge of the matter.
The London-based firm is working with an adviser to gauge potential interest, said the people, who asked not to be identified because the talks are private. CQS is considering a range of transactions including divesting a stake or selling one or both of its long-only and asset backed securities businesses that now make up the bulk of its more than $15 billion in assets.
The firm could also spin out some of the activities, two of the people said. It’s not clear if Hintze’s flagship Directional Opportunities fund is also part of the deal talks. Deliberations are ongoing and there’s no certainty CQS will proceed with a deal, the people said. The firm has held talks to sell a stake in the past without anything materializing, they said.
A representative for CQS declined to comment.
The move comes after a challenging few years for CQS following steep losses in some of its funds in 2020. Since then, the firm has shuttered at least two money pools, scuttled an expansion plan, spun off non-core strategies and cut jobs to return to its credit-investing roots. Assets have declined from peak of nearly $20 billion before the losses.
While Hintze’s CQS is best known as a hedge fund, most of its growth has come from its lower margin long-only business. That, along with its ABS strategy, now account for a majority of its assets.
Hintze’s flagship fund, which suffered a 35% loss in 2020, has yet to recover from the decline. The fund manages about $1.2 billion, down from about $3 billion before the losses. It gained 21.5% in 2021, 15.8% in 2022 and was flat this year through May, according to an investor document.
A deal, if successful, will mark one of the most high-profile transactions in the hedge fund industry since Marshall Wace sold a stake in itself to KKR & Co. in 2015.
Hintze, a former Australian army captain, started trading Yankee bonds for Salomon Brothers in 1982, and joined Goldman Sachs Group Inc. two years later. He quit after he wasn’t made a partner. Brady Dougan, the former CEO of Credit Suisse, hired him and later gave Hintze $200 million to start his own hedge fund in 1999. Five years later, Hintze returned $500 million to Credit Suisse and took full control of CQS.
(Updates with returns in seventh paragraph.)
