H2O Asset Management — a UK-based hedge fund, majority-owned by French investment bank Natixis — just gated a series of its funds due to illiquidity of its holdings.
On Friday evening, France’s chief market regulator, Autorité des marchés financiers (AMF), instructed the firm to close three of its funds due to “valuation uncertainties” resulting from their exposure to unlisted securities linked to the controversial German financier Lars Windhorst.
Besides the three funds indicated by AMF, H2O closed another five funds containing holdings of similarly illiquid assets, with the result that roughly half of the asset management firm’s entire portfolio of assets — €21.7 billion, according to the company’s website — is now under wraps.
Trapped investors cannot access their funds, and will be unable to do so for at least the next four weeks, during which time the company will try to sell off the illiquid assets.
But big questions still remain about the state of H2O’s financial health. And there are also concerns that the four-week gating period could be extended, as happened with UK open-end property funds that were gated in March and remain shuttered to this day.