(Bloomberg) -- Schonfeld Strategic Advisors still hasn’t raised the $3 billion it’s been seeking, despite being close to securing it last year.

“We haven’t yet formalized a drawdown facility partnership,” the firm said in an email to employees seen by Bloomberg. “We remain in active discussions with the initial set of investors we engaged with” in the fourth quarter.

Schonfeld also said that new interested parties emerged in the first quarter.

The development is the latest twist in a saga that captivated the hedge fund industry for much of last year. In November, Schonfeld abruptly ended talks to enter a partnership with Millennium Management, after securing verbal agreements for the cash it needed from new and existing investors — including pensions and Middle East sovereign wealth funds.

A representative for the firm declined to comment.  

Whether Schonfeld had raised the money and the identity of its backers has for months been an open question among industry observers.

The firm is in talks with one current and one new investor to each invest $1 billion in the fund, according to a person familiar with the matter. Another existing client may give $500 million and a new one may fork up the same. Some parties are still managing through their internal due diligence processes. 

Still, no official commitments have been signed.  

Drawdown Fund

Schonfeld was grappling with poor performance, client redemptions and high costs last summer, and its chief investment officer, Ryan Tolkin, approached $63 billion Millennium to discuss a potential partnership. 

But Izzy Englander’s firm wanted access to all of Schonfeld’s capacity, asking that it sever ties with clients, which became a sticking point in negotiations.  

Months later, Schonfeld pulled out of the discussions, confident that it had secured a capital raise that it viewed as a better alternative to the proposed partnership.

The raised capital would be placed in a drawdown fund, meaning Schonfeld could tap it as needed, to replenish any further redemptions and feed it into its Strategic Partners fund. Investors in the vehicle will receive a 25% revenue share, according to people familiar with the matter.

So far this year, the firm’s flagship Strategic Partners fund gained 6.2% through March, beating many multistrategy peers, while its Fundamental Equity money pool returned 5.9% landing near the bottom of the pack of stockpickers. 

Some investors worry that Schonfeld clients may continue to flee, after $4 billion was pulled last year, leaving it starting January with $10 billion of assets. 

Of the $8 billion in its Strategic Partners multistrat fund, about $2 billion is eligible for monthly withdrawals — and another $2 billion will become eligible once a one-year lockup expires at the end of 2024, the people said. 

The firm is trying to pivot its investor base to one with more locked-up cash. Any assets raised for the new fund will be retained for three years once invested. 

Schonfeld still believes its within its “optimal asset range,” the email said. 

(Updates with information on potential investors in seventh paragraph.)

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