Millennium Management and Engineers Gate Capital Management Terminate Hedge Fund Joint Venture

Millennium Management Dissolves Partnership with Engineers Gate

Millennium Management is terminating its partnership with Engineers Gate, a multistrategy hedge fund firm, after more than three years. The two firms have agreed to dissolve the separately-managed account, with Engineers Gate ceasing to manage money for Millennium by the end of this month.

The dissolution is due to disagreements over liquidity terms, with Engineers Gate seeking to have the same liquidity terms as its fund, including quarterly withdrawals in normal markets and investor-level gates in stress periods. The two firms entered into negotiations to restructure the relationship but were unable to reach an agreement.

Engineers Gate's hedge fund has seen a 50 basis point gain this month through March 20, but is down about 7% this year. The firm is in the process of replacing Millennium's capital and will start April with approximately $4 billion in assets in its hedge fund.

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The decision marks the end of one of Millennium Management's largest partnerships with an external manager. Millennium Management has a significant presence in the market, with $86.7 billion in assets under management, and has a history of spreading its capital beyond its own traders through separate accounts and spin-out hedge fund firms.

Key Figures:

• $3.6 billion: Estimated allocation size viewed by Millennium Management
• $1.5 billion: Estimated allocation size calculated by Engineers Gate
• $86.7 billion: Total assets under management by Millennium Management
• $4 billion: Estimated assets in Engineers Gate's hedge fund at the start of April