H2O to repay €70mn to investors with funds trapped in illiquid assets

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H2O Asset Management will make a €70mn repayment to investors who have had their funds trapped at the once high-flying asset manager since 2020, as it continues to make limited progress in returning €1.6bn it invested in illiquid assets.

Once a star of European investment that oversaw more than €30bn at its peak, H2O was plunged into crisis in 2019 after the Financial Times revealed it had substantial exposure to illiquid securities tied to the controversial financier Lars Windhorst.

H2O froze €1.6bn of investor funds the following year after the French financial regulator raised concerns about the valuations of its hard-to-sell assets. The Autorité des Marchés Financiers levied a record €75mn fine against H2O last year as punishment for “serious” rule breaches related to the illiquid investments while banning the firm’s co-founder Bruno Crastes from managing funds for five years.

H2O said the roughly €70mn would be paid in the “coming weeks” to investors that had had their money frozen in funds set up to house the illiquid securities.

The payment will be the second to these investors after H2O said last year that it had received a €250mn repayment from Windhorst’s investment firm Tennor Holding. Investors later received a smaller distribution of about €144mn, however, and fund disclosure then showed that a significant portion of the €250mn was repaid with new bonds rather than cash.

The announcement of a second payment comes a week after an FT investigation revealed the extent of the firm’s former chief executive Crastes’s personal entanglements with Windhorst, which included going on a family holiday to the Caribbean with the financier on his superyacht. It also revealed that H2O’s chief investment officer and co-founder Vincent Chailley strongly objected to many of the Windhorst-linked investments for…