Had an interesting conversation with a financial analyst I know who works in the City (London). He specialises in hedge funds.
Sisu Capital have for a number of years hit big problems as a hedge fund. They hit the jackpot back in the late 90s/00s with their portfolio picking up companies in distress and either making sure creditors got full payouts, stripped businesses for any equity value or sold them on for profit with minimum investment. Primarily it was about restructuring bad debt and handsome payouts for their investors. They had a lucky patch to say the least.
However, in recent times their luck seems to have run out. Apparently a lot of their major investors have pulled the plug on funding Sisu with ventures and their portfolio of distressed companies. Especially during the financial crisis in the last decade. Back in the day it was seen as a good idea to buy troubled football clubs, hence why they looked at Man City and Saints. They stupidly purchased CCFC a few years before the financial crash. The worst possible investment they could make.
Their investors are not known and is the case in the secretive hedge fund world. They come from all over the world and tangled up in the Cayman island web of secrecy.
Sisu losing their investors has meant serious restructuring of their portfolio to make ends meet. One recent sell off this year was air conditioning company Airinotec to German investment fund Abacus Alpha.
Sisu are currently in a dumping of assets mode and selling of parts of their portfolio. There's not much left on their books apprently.
Sisu as a business and as a hedge fund are not well respected in the investment circles these days. They were an upcoming hedge fund star back in the day but their status has fallen. Basically nobody in the City takes any notice of them anymore. "They're not a player anymore". Joy Seppala's 'stock' is not great anymore and that hurts in financial circles of hedge fund owners. It doesn't attract investors...a killer for a hedge fund.
Due to failing investments and shrinking of their portfolio, Sisu's management fees have been reducing, profits are hardly noticeable and losing money.
I was told that it's a surprise CCFC was not sold off a few years ago as it's the one investment in the portfolio which is seriously straining their business. Investors in CCFC have pulled the plug and Sisu have been looking for new investors. Those investors would have taken a loss or took what they could. They have not been forthcoming and that's why the likes of Brody popped up. He isn't a major player or investor. 'Probably put £50k or so into the investment pot'. The original investors in CCFC have moved on and pulled the plug a while back. The club had to move to being self funding.
I mentioned the current issue of asset stripping in the club...the answer I got was well if the holding company owns Ryton and now land is a prime asset, Sisu will look to cash this in. There isn't anything left of the club asset wise to get money from. They had a go with early investment but that pot of money ran out. Considering their management fees have reduced or frozen they need instant cash accessibility through either player sales or land deals. This also helps pay the remaining investors.
Overall, Sisu have been left with the white elephant in the room... CCFC. The hedge fund is in dramatic free fall as a business and not really making money. CCFC really is their last hope of trying to pull off a spectacular deal from somewhere...but they have failed. They failed to get the Ricoh, failed with promotion to the Premiership, lost investors, can't put money into the club. Club is going one way and that's to L2 now. They now have a company on their books which is a portfolio killer. But how will they recoup original investment money? They can't as the club is now worth less and they failed to build CCFC with assets such as a stadium.
As my contact said...'they won't be hanging around for much longer. They can't afford it and nobody trusts their money to be invested with them anymore'.
If they can't find new investors to pull CCFC up and build assets they will dump. He said it wouldn't surprise me if another hedge fund acquired what's left of Sisu and that means they take on CCFC.
We wait and see...
