Former hedge fund manager Remy Trafelet has resurfaced as the head of a new special purpose acquisition company (SPAC) created to take advantage of opportunities arising from the global pandemic.
This is the next act for a person who has suffered several embarrassing professional setbacks and a controversial divorce that played out in the tabloids.
Trafelet is now chief executive officer of Colonnade Acquisition Corp., a blank-check company that last week filed plans to raise about $200 million for some sort of deal in the natural resources, energy, real estate, and agricultural industries, according to its prospectus. It is targeting a company with a current enterprise value between $600 million and $1 billion.
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The SPAC said it is seeking companies based in the U.S., Asia, or U.K that may have “near and intermediate term liquidity needs but that have demonstrated the ability to generate free cash flow and offer compelling growth opportunities.”
In its prospectus Colonnade stressed Covid-19 “has created considerable long-term opportunities for the company with countless assets trading at significant discounts to both intrinsic value and replacement cost,” noting that the real estate and energy industries have been hit particularly hard.
“Plummeting revenues combined with over-leveraged balance sheets are pressuring many real estate and energy companies to consider immediate and wholesale strategic alternatives,” Colonnade added. “With cash flows deteriorating and assets being priced at substantial discounts, we expect that the company will be evaluating unprecedented opportunities.”
Trafelet, a onetime Fidelity Investments portfolio manager, founded Trafelet Capital Management in 1999. The following year he formed the Trafelet Delta Funds, which managed several long/short equity hedge funds. At one point he was managing more than $6 billion, thanks in part to his annualized return of 25.1 percent from inception through 2007.
But Trafelet lost big in the 2008 financial crisis, like many hedge funds. After posting a 28.4 percent loss, the company experienced slew of redemptions. In 2009, he spun off the firm’s London operations to Habrok Capital, a global long/short equity hedge fund.
He rebounded in 2009 with gains of 18.7 percent, primarily managing personal money. However, he didn’t hit his high water mark again until 2013.
In 2015, Trafelet teamed up with George Brokaw, who joined as a managing partner, and changed the name of the firm to Trafelet Brokaw & Co. They then decided to “selectively open” to outside capital.
However, by 2019 he had liquidated a long/short equity fund after it lost 37 percent in 2018, according to a report in Hedge Fund Alert. He also dissolved the partnership with Brokaw.
Hedge Fund Alert also reported at the time that he lost control of a special purpose vehicle called 734 Investors after a number of limited partners sued, including Highbridge Capital Management co-founder Glenn Dubin.
Within Trafelet & Company, Trafelet also had founded Hazeltree Treasury Solutions, a fintech operation eventually spun out as a standalone company, according to his bio.
Trafelet served as president and CEO of Alico, an agribusiness holding company, from 2016 to 2019, then resigned amid controversy over certain board actions.
Trafelet’s personal life also became a public circus when he divorced socialite Lara Schmidt Trafelet. She sued her forensic accountant Cipolla & Co. for overbilling, despite earlier telling them “to take the most aggressive stance possible regardless of cost” after her estranged husband refused to move out of their $15 million Park Avenue apartment and $10 million Long Island summer home, according to a report in The New York Post, which cited legal papers.
In December 2019 Trafelet, 50, married heiress, former tennis player, and British fashion designer Lady Melissa Percy. She is the youngest daughter of the Duke of Northumberland. The 33-year-old grew up at Alnwick Castle, which appeared as Hogwarts in the Harry Potter films.