Redrow up for grabs as Toscafund sells

By Mark Foxwell
Updated: 06:05 EDT, 9 November 2008

Hedge fund Toscafund Asset Management is understood to be trying to sell its 27% stake in cash-strapped housebuilder Redrow.

On a downer: Hedge fund Toscafund is trying to sell off its shares in cash-strapped Redrow

Toscafund, which took a £300m hit from the collapse of American bank Washington Mutual in September, is desperately trying to raise cash. The hedge fund's value slumped by about 30% last month as investments in shares of financial companies and housebuilders slumped.

Toscafund, run by Martin Hughes, has offloaded its ten per cent stake in Britain's biggest housebuilder, Taylor Wimpey, one of its core investments.

Market watchers suggested Hughes was preparing a fire sale of assets. The company's main stakes include Playtech, Aberdeen Asset Management and Sovereign Bancorp.

Known in the City as the Rottweiler, Hughes, a 47-year-old former banking analyst who earned £51m last year, strongly denied such a move.

'We are not looking to run a fire sale of assets,' he said. 'We have several core businesses, which will be retained in our portfolio.'

However, Hughes, who backed Virgin's abortive bid for Northern Rock this year, declined to comment on a sale of its stake in Redrow.

Early last month Toscafund sent a letter to shareholders, asking whether they wanted to withdraw cash.

This was accompanied by a plan to split the shares into two classes - one for those who wanted to continue investing in the fund, the other for those who wanted to take their money out.

The letter said the company would look to retain more than half of its investments and would not have to sell any shareholdings in the public companies.

But on October 13, Toscafund said it had sold its stake in one of its core investments, Taylor Wimpey. Toscafund's holding in Redrow is worth about £80m, enough to take some strain off the troubled hedge fund.