GLG Partners, the European hedge fund manager, is rumoured to be holding talks to buy Tisbury Capital as the industry looks to consolidate after a period of weak performance.

GLG, the second largest hedge fund manager in Europe, is reported by the Financial Times to be approaching its smaller UK rival just days after Tisbury shut its Boston-based US operations last month. Tisbury could be worth $200 million based on its $2.2 billion assets under management.

The report follows GLG’s comment in February that it was looking to use funds raised from its recently-listed shares to make acquisitions, exploiting discounted valuations of hedge fund managers in the current market turmoil. Since the turn of the year, hedge funds on average have made negative returns of -0.43 per cent, according to Hedge Fund Research, a US company.

A spokeswoman for GLG declined to comment on the matter following enquiries by WealthBriefing. Tisbury did not immediately return calls.

Tisbury Capital came under an unwelcome spotlight last summer when one of its founders, Stephane Carnot, was forced to quit the Mayfair-based business after his co-founder, Gerard Griffin reported him to the Financial Services Authority, the UK official financial regulator, for allegedly “unauthorized” personal trading. However, there has been no FSA enforcement action taken against Mr Carnot for any alleged irregularities, an FSA spokeswoman told WealthBriefing.