Troubled City Financial is to transfer £250 million worth of assets to boutique fund manager Garraway Capital Management.
According to Reuters, City Financial is transferring the City Financial Absolute Equity fund, along with the City Financial Multi Asset Growth, Multi Asset Diversified and Multi-Asset Dynamic funds, to Garraway.
City Financial did not comment, while Garraway could not be reached.
The news comes after Wealth Manager revealed last week that City Financial had suspended dealing in its £183 million Absolute Equity fund following a spike in redemptions as the firm battled to secure a lifeline.
In a letter to investors seen by Wealth Manager, chief executive Robert Hain said a temporary suspension of dealing in the City Financial Absolute Equity fund was in the best interests of investors.
'We review the situation daily and will notify all investors as soon as we can to announce that the fund has re-opened for dealing,' chief executive Rob Hain said in the letter.
Dealing was suspended on 4 March, around a fortnight after City Financial said it intended to appoint an administrator on 22 February.
The letter indicated that after the news was picked up by the press on 26 February the fund was hit by a significant increase in redemptions.
'City Financial’s status has no direct impact on the fund, the circumstances... resulted in a significantly increased level of client redemptions,' the letter read.
According to regulatory filings over the past two weeks, the fund has exited a number of major positions.
The fund is languishing near the bottom of its peer group over the 12 months to the end of January, having racked up a 25.9% loss, ranking it 94th out the 96 funds in the sector.
According to its factsheet, it has returned 10.2% since its inception in 2008.
City Financial filed its notice to appoint an administrator after assets under management fell from $3.3 billion (£2.5 billion) to $1.2 billion in 2018.
Hain said the firm was working with an advisory firm to review its options, saying it had held 'a number of positive discussions'.
Accounts for the business for 2017 show losses before tax mounting to £16.7 million, surging from £1.4 million in 2016, as costs ballooned from £25.6 million to £40.5 million.
They also detailed two loans amounting to a combined £3.5 million, repayable on demand and carrying an interest rate of 12%.
A subsequent report linked the loans to Hain, who owed the business £965,150, and vice-chair Andrew Williams, who owed it £2.8 million.