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Top funds industry news — June 29, 2020: Fitch says funds with $62bn in assets suspended redemptions over liquidity mismatches, and other business-critical news
Fitch Ratings says real estate, high-yield bond and emerging market debt were the fund sectors most affected by liquidity mismatches stemming from market dislocation amid the onset of the Covid-19 pandemic and the imposition of national and local lockdowns in Europe and North America. The rating agency has identified funds with around $62bn in assets under management that suspended redemptions as a result of market stress, albeit just 0.11% of global fund assets at the end of 2019, while others have taken advantage of regulatory provisions to introduce liquidity management tools such as gates and swing pricing. Fitch argues that investors are likely to pay greater attention to fund liquidity, especially since some sectors have benefited from central bank market intervention that may not be forthcoming in future periods of stress.
— Simon Gray, Editor in Chief
Surge in fund redemption suspensions due to liquidity mismatches: Fitch Ratings
Fitch Ratings says investment funds with around $62bn in assets under management have suspended redemptions due to market stress resulting from the Covid-19 pandemic, largely as a result of liquidity mismatches. The surge in trading suspensions and resorting to special liquidity management tools will prompt investors to re-appraise funds’ liquidity, Fitch says. Regulators have identified real estate, high-yield bond and emerging market debt funds as sectors most exposed to liquidity risk.
Luxembourg’s Fortuna Banque to be acquired by UK asset management firm
Luxembourg-based co-operative bank Fortuna Banque has reached agreement to be acquired by UK specialist Chenavari Investment Managers. Fortuna Banque has been seeking a buyer for several years, and was on the point of being acquired by Bank of Beruit before the deal fell though last year. The London-based credit investment specialist has €5bn in assets under management, including investments in several other European banks, and has operated a hedge fund management company in Luxembourg since 2009. Under the agreement, Fortuna would maintain operational independence, using a capital injection to seek to expand its mortgage lending and wealth management businesses. The acquisition is subject to regulatory approval.
Christophe Gaul appointed Ocorian’s Europe regional head
UK-headquartered fund and corporate service provider Ocorian has appointed Christophe Gaul as regional head for Europe, on top of his existing responsibilities in charge of the group’s Luxembourg subsidiary. Gaul was head of Estera Luxembourg, which he founded in 2009 under the name of Headstart, before it became Ocorian Luxembourg following a merger between the two groups last year. He began his career at PwC Luxembourg in 2000 and subsequently worked at Alter Domus and private equity firm Apax Partners before becoming chief financial officer at BI-Invest Advisors.
Best source: Paperjam (in French)
Sanne appoints Jens Grüneklee as director of business development
Fund and corporate service provider Sanne Group has appointed Jens Grüneklee as director of business development in its Luxembourg office. He will be responsible for driving the group’s business in Europe, the Middle East and Africa, including private equity, private debt and capital markets, real assets and hedge funds. Grüneklee’s experience includes international M&A and three years as CEO of German fintech firm cash.life.
Best source: Luxembourg Chronicle
CSSF outlines Covid-19 security measures for financial sector employees
The CSSF has set out measures to be followed by financial sector businesses to enable staff to return to work with the minimum possible risk of coronavirus infection, in line with government guidelines on social distancing. Special procedures are required for internal and external meetings, canteen areas and meeting rooms, the reporting of symptoms and the cleaning of office spaces and equipment, and institutions must display government information posters to remind staff of the rules. The regulator also says enterprises must identify and offer special protection to employees who are at risk or members of a household including a vulnerable person.
Best source: InFinance (in French)
Facts & Figures
Luxembourg fund assets grow by €26.3bn in May
The assets of Luxembourg-domiciled investment funds rose by €26.3bn in May, the second highest increase in Europe after Ireland, where assets grew by €30.8bn, according to Refinitiv Lipper. Funds domiciled in the UK increased by €5.6bn, but France saw a decline of €2.2bn, along with the Netherlands (down €600m) and Italy (down €500m). The Covid-19 pandemic led to a slump in the equity markets and hence fund assets in March, but the sector recovered strongly the following month.
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