H2O’s Illiquid Misadventures Aren’t Over Yet
If only the hedge fund had stuck to its expertise in global macro investing, rather than chasing hard-to-trade, impossible-to-value private debt.
The Natixis SA logo sits on a sign outside the company's headquarters in Paris, France, on Saturday, June 29, 2019.
Photographer: Martin Barzilai/Bloomberg
Natixis SA’s decision to sell its majority stake in H2O Asset Management ends the French bank’s association with the hedge fund. H2O’s customers, however, remain victims of the firm’s foray into illiquid securities. It remains to be seen when — and if — they’ll get all of their money back.
What soured the relationship between Natixis and H2O was the asset manager’s dalliance with debt issued by German entrepreneur Lars Windhorst. In June of last year, the Financial Times reported that the fund had bought private bonds issued by companies controlled by Windhorst. That prompted fund research company Morningstar to suspend its rating on one of H2O’s flagship funds.