GLG Partners, Mayfair's largest hedge fund, is in a tug-of-love to keep its star manager Greg Coffey after the Australian super-trader quit the firm.

Coffey is arguably GLG's most important hedge fund manager, responsible for more than a quarter of the firm's $24 billion assets. His Emerging Markets Fund was this year named fund of the year at the EuroHedge awards. Coffey also led GLG's key strategic move into China and India with the acquisition of a stake in a local private-equity firm.

But the softly-spoken 36-year-old, who lives in Chelsea with his wife and children and is reckoned to be worth in excess of £250 million, resigned from GLG earlier this month, according to regulatory filings. It is understood Coffey, who formerly worked at Australian bank Macquarie, aimed to set up his own hedge fund.

But in a further twist it emerges that GLG, founded and led by London's richest hedge fund managers Noam Gottesman and Pierre Lagrange, has opened "discussions concerning a range of options for the future". It is understood Coffey has rescinded his resignation for the time being and these negotiations could see GLG being a major investor in any new venture Coffey might wish to set up.

The move by Coffey comes less than a year after GLG's top players made a packet in the firm's flotation in New York.