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December 01, 2006

Citadel Hedge Fund Up $800 million

posted by MR WAVETHEORY at 12/01/2006 03:07:00 AM
A Citadel Investment Group bond offering revealed profit in its flagship hedge fund had more than quintupled through August 2006 from a year before.

A document-disclosed in the first-ever bond offering from the hedge fund company-credited investment performance for the profit, according to a report circulating in the media.

The profit is indication that Citadel has not sustained a major downdraft. The Chicago company has denied a rumored meltdown suffered in an alleged energy blowup.

The disclosure said Citadel saw net income in its Kensington Global Fund rise to $795.6 million from $148.4 million a year prior. The fund has about $9.5 billion in capital.

Citadel revealed its plan to raise $2 billion in a public bond offering earlier this week.

The offering is the latest attempt by a hedge fund company to establish itself as a mature financial service outfit. Fortress Investment Group, for example, made a high-profile initial public offering in November.

Consistent capital is a benefit of public ownership and would let a hedge fund like Citadel expand its distribution capability and continue as a financial institution after the departure of its founding partner.

Fitch expected to give Citadel a BBB+ note rating. Goldman Sachs and Lehman Bros. will manage the offering.

Citadel, like Fortress, had long been subject to speculation it would IPO. Thirty-seven-year-old Kenneth Griffin founded Chicago-based Citadel, a multi-strategy hedge fund which now has $12 billion under management, 1990.

Hedge fund giant Citadel is attempting to buy access to the data its competitors supplied to the PlusFunds Group.

PlusFunds supplied data for the now defunct Standard & Poor's Hedge Fund Index, but got caught up in the Refco scandal and was forced to file for bankruptcy. Earlier this year, the firm sued S&P for violating its agreement with PlusFunds and canceling the index.

According to a report by MarketWatch, PlusFunds is now seeking court permission to sell a non-exclusive license to its database of 40 funds to Citadel for $75,000. The data includes trading histories of such industry stalwarts as Bridgewater Associates, GLG Partners and Vega Asset Management.

Even the most recent information in the database is at least five months old, but it could provide Citadel with insight into the strategies of its competitors.

With more than $12 billion in assets, Chicago-based Citadel engages in multiple strategies and is not afraid to let its presence be known in the markets. The fund most recently made waves when it revealed its profits had more than quintupled in the year ending in August.

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