Six of H2O Asset Management’s funds saw their assets tumble by more than €2.6bn by the end of Friday, as investors looked to withdraw their money after the Financial Times revealed an outsized bet on debt linked to a controversial German financier.
Fresh data published show that the flow of money out of the funds extended into Friday, the same day H2O’s chief executive gave a video address to calm investors’ nerves and explain his relationship with Lars Windhorst, a flamboyant entrepreneur with a history of legal troubles.
Assets of six funds the FT flagged as having exposure to the German entrepreneur’s debts — Adagio, Allegro, Moderato, Multibonds, Multistrategies and Vivace — collectively dropped another €1.2bn on Friday, taking the total to €2.6bn.
A spokesman for H2O declined to comment on Tuesday.
The Mayfair-based firm, which is a subsidiary of French bank Natixis, initially suffered a €1.4bn drop in assets across the funds between Tuesday and Thursday last week, after the FT revealed the scale of its holdings of bonds tied to Mr Windhorst.
Despite H2O’s vow last week that it was “committed to continuing to work” with Mr Windhorst, the fund manager has begun dumping its exposure to the German financier as its crisis has deepened.
H2O told clients on Monday that it had sold €300m of the bonds last week, leaving it with a €1bn exposure. It then publicly announced that it had less €500m of exposure left by the end of Monday, although it did not specify whether this was achieved through sales, a valuation cut, or a combination of the two.
Morningstar, whose assessments are used as a key guide for investors, suspended its rating of an H2O fund the day after the FT’s report, citing liquidity concerns.
Natixis’s asset management chief last week described H2O’s range of holdings as “quite diversified”, however, adding that the portfolio included “even a luxury goods company in Italy”, in reference to La Perla — the Italian lingerie maker Mr Windhorst purchased in 2018 after settling a legal dispute with its previous owner, Italian entrepreneur Silvio Scaglia.
Separately, the head of one of the companies H2O backed announced plans to step down on Monday. ADS Securities confirmed its chief Philippe Ghanem is leaving the Middle Eastern brokerage, but that the decision was unrelated to the crisis at H2O. The asset manager last week listed an investment in the bonds of ADS Securities as one of nine positions related to Mr Windhorst.