- Soroban Capital, founded by Eric Mandelblatt and Gaurav Kapadia, is returning $4.1 billion from its master fund, according to a client letter seen by Business Insider.
- Kapadia is leaving to form a family office.
Soroban Capital is returning $4.1 billion from its master fund, according to a client letter dated May 7 seen by Business Insider.
New York-based Soroban is reorganizing to focus on its Soroban Opportunities Fund, founder Eric Mandelblatt said in the letter.
Earlier this year, Soroban returned $1.5 billion in assets to clients, the letter said.
"I now believe we should go further and close the Master Fund entirely," Mandelblatt wrote. Soroban plans to give back 75% of the master fund's assets by June 30 and the remainder by the end of 2018, according to the letter.
"This is not a 'market call' but a business model call, and one that we have high conviction is the right one for us," Mandelblatt added.
The shift will be to a more concentrated portfolio. Per the letter:
"The number of positions across the Firm will be reduced from ~50 [20-25 longs / ~30 shorts] to ~10-20 [~10-15 longs / ~0-10 shorts]. Taking all the Firm’s investment resources and concentrating them on ~1/3 the number of positions will free up time for independent thinking, energy to search more extensively for idiosyncratic investments, and allow us to deepen our due diligence on industries and portfolio companies."
Gaurav Kapadia, the firm's co-founder, is also leaving and is building a family office with a mandate that allows him "to invest beyond publicly traded equities," the letter said.
Kapadia and Mandelblatt launched Soroban in 2010 with several hundred million dollars, and its assets steadily grew to become one of the heftier long-short equity funds on Wall Street. The name "soroban" is an abacus developed in Japan.
Soroban managed $11.1 billion as of mid-year last year, and its assets had been growing – by about 30% from a year prior, according to the Absolute Return Billion Dollar Club ranking.
Soroban's master fund generated 13% annualized returns, net of fees, according to the client letter.
Soroban was a big holder of NXP Semiconductors, according to recent SEC filings. Qualcomm made an offer to buy the semiconductor in 2016, but that merger has hit a snag due to regulatory hurdles. NXP's shares are down 17% this year.
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