H2O sells private bonds and cancels fund entry fees
H2O, the UK-based asset management arm of Natixis, has sold some of its private bonds portfolio and cancelled entry fees to attract new investors to its funds.
The firm cut non-rated private bonds to below two per cent of assets under management after struggling with outflows.
Read more: H2O shrugs off conflict of interest concerns
In a statement this morning the company said: “H2O has sold part of its non-rated private bonds and, based on a valuation received by international banks, marked down the balance in compliance with UCITS regulation, thereby cutting their aggregate market value below two per cent of H2O’s assets under management.
The company added: “H2O’s funds will be priced at a discount between three per cent and seven per cent. H2O has decided to remove all entry fees across all funds until further notice.”
Last week Morningstar put one of H2O’s funds under review. The ratings agency cited concerns over investments in illiquid bonds issued by firms related to Lars Windhorst, who owns investment holding company Tennor.
Morningstar placed the €2.3 billion global macro fund H2O Allegro “Under Review”.
Morningstar also highlighted a potential conflict of interest as H2O chief executive Bruno Crastes was a board member of Tennor.
The firm’s chief investment officer Vincent Chailley has since replaced him on the board.
“While this sleeve is small in absolute terms and we do not believe it poses an immediate risk to the fund’s performance, the concentration of these investments on a cohort of companies linked to the same individual is a cause for concern,” said Morningstar analyst Mara Dobrescu.
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Shares in French investment bank Natixis tumbled following the analyst note. Shares are up more than two per cent this morning.
Concerns over illiquid assets in open-ended funds have spiked following the suspension of Neil Woodford’s equity income fund. The fund was frozen following a spike in redemption requests.