Like Many Hedge Fund Investors, Dyal Capital Partners Isn’t Getting What It Thought It Paid For

As we have noted, ad nauseum some might say, running a hedge fund doesn’t seem to be as much fun as it used to be, which is probably why so many of its most famous practitioners have chosen to, uh, not do it anymore. This is not usually a problem for anybody, really: The hedge fund manager gets to do something that will hopefully make him happier and his clients, whether they know it or not, are freed from paying too much for far, far too little. There is an exception. A small one, to be sure, but a potentially legally-important one: Investors not in the hedge funds themselves, but in the hedge fund firm that manages them. Or doesn’t as much anymore, as Dyal Capital Partners complains about Jana Capital Partners, of which it owns 20%.

David DiDomenico, a Jana co-portfolio manager for the past decade, is now also chief executive officer of Osprey Technology Acquisition Corp. Osprey, which recently raised $275 million in an initial public offering, said it would rely on DiDomenico as it sought takeovers in the enterprise software industry.

The value of Dyal’s investment in Jana was redacted from the lawsuit, but Dyal implied it had paid a large sum for the stake and said it “did not want them to take that money and run.” DiDomenico’s departure from the hedge fund firm would “spell disaster for Jana’s future,” according to the lawsuit. Yet DiDomenico admitted to Dyal that his new venture had taken him “‘outside the Jana box,’” Dyal claims.

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