Hedge fund Centaurus Capital is to wind down its flagship $1.2 billion Alpha fund and launch new funds after investors rejected a plan to restructure the portfolio, a source close to the company told Reuters.

Centaurus had proposed the event-driven fund -- down about 25 percent in the 10 months to end-October -- give investors back about 30 percent of their cash, and change its strategy to more lucrative areas of opportunity such as distressed credit.

Investors rejected the plan, which required more than 50 percent backing, and Centaurus will now impose a temporary gate to limit outflows, and give investors their money back as soon as possible, the source said. The company plans to launch a distressed debt fund and expand its Asia fund, and may launch further strategies.

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