Odey Asset Management in talks with SW Mitchell over Oliver Kelton’s funds

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Odey Asset Management is in “advanced talks” about transferring four funds and their manager, Oliver Kelton, to investment boutique SW Mitchell Capital, as the hedge fund reels from sexual assault allegations against its founder Crispin Odey. 

In a letter to clients on Tuesday and seen by the Financial Times, Odey Asset Management said the funds it is aiming to shift include Brook Continental European, Brook European Focus, Brook European Focus Absolute Return, and Odey Pan European.

According to the firm’s website, the largest of these is Brook European Focus, which has €713mn assets under management. Kelton took over the Odey Pan European fund earlier this month from Crispin Odey after partners at the firm he founded ousted the financier in response to the allegations against him.

The talks come after the firm said earlier this month that it was in advanced discussions about shifting funds to rivals, as part of broader measures to contain the fallout from the allegations and as investors rushed to withdraw their money.

SW Mitchell Capital is the first named potential buyer for the firm’s assets since Odey Asset Management announced it was to be broken up two weeks ago, in the wake of an FT investigation into accusations from 13 women. Crispin Odey strenuously denies the allegations. Odey Asset Management, established in 1991, manages about $4.4bn.

SW Mitchell Capital is a London-based European equities investment boutique, founded in 2005. The firm manages assets for clients globally, including pension funds, charities, and financial advisers.

Its managing partner Stuart Mitchell used to work at JO Hambro Investment Management, where Kelton also used to work.

SW Mitchell Capital did not immediately respond to a request for comment. Odey Asset Management declined to comment.

Odey Asset Management said in Tuesday’s letter that talks with SW Mitchell are still subject to approval from regulators and the funds’ boards. The letter added that “similar discussions are ongoing in relation to other funds” managed by Odey Asset Management. 

The firm created a subsidiary in 2020 under a new brand, Brook, for funds that were run by managers other than Crispin Odey.

The latest development comes hours after Odey Asset Management told clients that it was suspending trading in two of its funds that were previously run by Crispin Odey. The firm halted trading in its flagship Odey European Inc and OEI Mac funds, which it said in a note to investors was because of customer redemptions.

Odey Asset Management has been forced to suspend trading in many of its funds as investors have sought to withdraw their money.

Until this week, five funds were suspended, including its Swan fund which the firm said will be liquidated and money returned to investors. The two hedge funds — Odey European Inc and OEI Mac, were subsequently suspended.

The funds came under pressure after Odey Asset Management’s banking partners, which included JPMorgan, Goldman Sachs, and Morgan Stanley, pulled the plug on their prime broking relationship with the firm. JPMorgan also has moved to sever its custodian relationship. Prime brokers provide hedge funds with loans to amplify returns and hedging products to protect against losses, while custodians safeguard client assets.

Additional reporting by Costas Mourselas in London