2014.07.2303:46:58UTC+00John Paulson hedge fund makes a billion in profit

John Paulson hedge fund makes a billion in profit

Funds managed by John Paulson’s Paulson & Co. is set to rake in close to a billion in profits after OneWest Bank was announced to be purchased by CIT Group Inc.

The sale, which is  equal to $3.4 billion in offerings of both cash and stock and, is good news for investors who put in with Paulson five years ago. Paulson & Co’s Recovery Fund and credit pool spent $400 million to take a 24.9% stake in California-based OneWest bank back in 2009 which is now worth $788 million with additional dividends amounting to $551 million to bring the total of gains for the funds at $939 million.

Paulson & Co. has enjoyed gains since last year when its Recovery Fund and Credit Opportunities Fund climbed up by 63% and 22% respectively. The Recovery Fund has so far improved by 4.5% this year to fall second behind the credit fund’s 8.9% increase during the same period.

In a memo the investment firm wrote to clients, they said they expect the deal to be finalized within six to nine months during the minimum of which Paulson & Co. will be prohibited from trading its stock.

Billionaire George Soros, Christopher Flowers, and Dell founder Michael Dell were the other investors who benefited in the deal.