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Partners at Brexit-backing billionaire's hedge fund share £68m

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
Sir Michael Hintze, executive chairman and senior investment officer at CQS, speaks at the 2019 Milken Institute Global Conference in Beverly Hills, California, U.S., April 29, 2019. Photo: REUTERS/Lucy Nicholson

Partners at one of Britain’s best-known hedge funds shared $87.5m (£68m) between them last year, accounts show.

CQS, the hedge fund run by Brexit-backing billionaire Sir Michael Hintze, distributed $87.5m in profits to its 36 partners in the 12 months leading up to the end of March 2019, according to recent accounts filed with Companies House.

The highest paid director was handed $14.3m (£11.1m), up from $13.8m (£10.7m) in 2018. The director is not named but likely to be Sir Michael Hintze, who founded and owns the hedge fund and serves as both its executive chairman and senior investment officer. CQS declined to comment.

British-Australian Hintze, 66, founded credit-focused investment firm CQS in 1999. It has grown into one of the UK’s largest and best-known hedge funds, with $18bn (£14bn) of assets under management at the end of March 2019.

The hedge fund’s success has turned Hintze into a billionaire, worth an estimated $2.6bn (£2bn) according to Forbes. Hintze is one of the Conservative Parties biggest donors, donating millions over the years and £42,500 so far in 2019. He is also a Brexit supporter and donated £100,000 to Vote Leave during the 2016 referendum campaign.

READ MORE: Britain is now closer to a general election than Brexit

CQS lists Brexit uncertainty as a key risk for its business in its accounts. The company said it is actively monitoring political developments to counter the risk.

“Brexit feels important here [in London], but in the world as a whole it doesn’t really matter,” Hintze, whose parents fled communist China and settled in Australia, told the Australian Financial Review in a recent interview.

Former City minister Lord Paul Myners sits on the board of CQS. Photo: CARL COURT/AFP/Getty Images

Numerous political heavyweights and City grandees sit on CQS’ board of directors, including former Labour City Minister Lord Myners, George Bush’s former Secretary of State for Economic, Energy, and Agricultural Affairs Reuben Jefferey III, and Prince Charles’ former principle private secretary Sir Michael Peat, who signed off the accounts.

Lord Richards of Herstmonceux, the former head of the British Armed Forces, and Alexander Downer, Australia’s former foreign minister and former High Commissioner to the UK, were also on the board during the period covered by the accounts, although both have since resigned.

Former London Stock Exchange chief executive Xavier Rolet also sits on the board. He joined CQS as CEO in mid-January after Hintze ran the business for 19 years.

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It is not clear how many, if any, of CQS’ eight board members are also partners in the firm. Accounts show the board, management team, and executive team were handed a combined $46m (£35.7m) last year. There is understood to be significant overlap between this figure and the profit share figure. CQS declined to comment on the pay of any individuals.

The $87.5m distributed among partners represents a step down from the prior year. Accounts for 2018 and 2019 are hard to compare because the length of time covered in each period is different. Yahoo Finance UK estimates the profit share was around $105m (£105m) for 2018 when the differences are stripped out.

The drop in profit came after a year of poor performance for some of CQS’ top funds. CQS’ directional fund lost 3% of its value in 2018, Yahoo Finance UK understands, while its asset-backed securities (ABS) fund rose by a modest 3.5%, and its multi-asset fund declined by 0.2%.

Funds have rebounded this year, with the directional fund returning 10.8% in the nine months up to the end of September 2019. The ABS fund is up 6.9% over the same period and the multi-asset fund up 6.1%, Yahoo Finance UK understands.

CQS declined to comment on the performance of its funds.

As well as his political donations, Hintze and his wife are known for their philanthropy. The Hintze Family Charitable Foundation donated £5m to the Natural History Museum in 2014, its largest ever single donation, and has given £2.5m to the National Gallery, among other donations.