A screen grab of Lime Asset Management's official website
Troubled hedge fund Lime Asset Management on Monday confirmed total investor losses of 634.1 billion won ($520.3 million) from 173 feeder funds, which were injected in two of its master funds, Pluto FI D-1 and Tethys 2.
The company said the estimate is based on the combined subscription amount of the feeder funds -- investor’s money that initially went to the funds -- at 1.6 trillion won minus their current net asset value.
The estimate came as Lime Asset wrapped up the revision of the value of the funds associated with Pluto FI D-1 and Tethys 2 -- each dedicated to privately placed bonds and mezzanine products -- a week after an internal audit.
The loss is expected to widen, as Lime Asset is awaiting a final estimate for its other master funds including Pluto TF-1 by the end of February, The trade finance fund was found to have been involved in a ponzi scheme, and is now facing a spillover from liquidation of funds by New York-based investment adviser International Investment Group.
Lime Asset has been managing 262 funds in total, entangled in a convoluted master-feeder fund structure.
On Sunday, there were news reports that Lime Asset’s loss amounted to 1.2 trillion won, based on the calculation of 262 funds’ total subscription amount at 4 trillion won minus their combined NAV at 2.8 trillion won.
Lime Asset said Monday the calculation can be misleading as the quoted figure double counts money from the feeder funds and that of the master funds, which drew the feeder funds’ money.
The company is facing a possible massive compensation claim depending on the arbitration process by the regulators. Financial authorities are looking into possibilities that Lime Asset, banks and brokerage houses misinformed investors about the ongoing losses when it drew money into its feeder funds.
This came as a series of Lime Asset’s funds have been frozen as investors rushed to demand redemption since last year and the lack of marketability of its invested assets came under the spotlight.
By Son Ji-hyoung (email@example.com