Natixis fund fall passes €5bn as H2O asset bleed continues
Six funds shed nearly 30 per cent of value on concerns over illiquid holdings
The six funds at the heart of H2O Asset Management’s illiquid bond crisis have now lost more than €5bn in value, as investors pull their money on concerns about an outsized bet on debt linked to a controversial German financier.
Fresh data showed shrinkage accelerated on Monday, with six of the Natixis subsidiary’s 18 funds losing close to €2.4bn in a single day, as jitters intensified around H2O’s relationship with Lars Windhorst, a flamboyant entrepreneur with a history of legal troubles. Adding to the strain, H2O is cutting its estimates for the value of some assets linked to Mr Windhorst.
The six funds — named Adagio, Allegro, Moderato, Multibonds, Multistrategies and Vivace — had assets of €17.2bn before the outflows began last week, when the Financial Times reported on their exposure to Mr Windhorst. Their assets have now dropped by close to 30 per cent. The biggest of the funds — Adagio — lost more than €1bn on Monday.
A spokesman for Mayfair-based H2O declined to comment on Wednesday. In a statement on Tuesday afternoon, the asset manager said that “net outflows have slowed significantly” since Monday, adding that its funds had since received “some material inflows”, without providing details of their scale or source.
The fund manager, whose main focus is on government bonds, said in a letter to investors on Monday that it would revalue any of its other debt linked to the German financier at “a very significant discount” to previous calculations. It has also begun to offload hundreds of millions of euros of these illiquid bonds.
H2O told clients on Monday that it sold €300m of the bonds last week, leaving it with a €1bn exposure. It then publicly announced that it had less than €500m of exposure left by the end of Monday. It did not specify what proportion of this was due to revaluations or to sales.
Several traders and distressed debt investors said that a “large holder” had been looking to sell bonds from Italian lingerie maker La Perla and Abu Dhabi brokerage ADS Securities — two of the nine companies with bonds linked to Mr Windhorst that are in H2O’s portfolios. ADS Securities separately said on Monday that its chief Philippe Ghanem was leaving, but also said that the decision was unrelated to the recent events at H2O.
Natixis’s asset management chief last week described H2O’s range of holdings linked to Mr Windhorst as “quite diversified”. The French bank has seen €1.7bn chopped off its market capitalisation since Thursday on the back of the concerns around H2O, which is a large contributor to asset management revenues.