Regulator slaps record fine on H2O over Windhorst-linked investments


French regulators have imposed a record €75mn fine on asset manager H2O and banned its co-founder Bruno Crastes from the industry for five years over investments in illiquid debt linked to controversial financier Lars Windhorst.

The Autorité des Marchés Financiers announced the fine on the same day that H2O Asset Management said it would start paying back investors some of the €1.6bn trapped in its funds for more than two years, in response to a part-repayment by Windhorst’s firm, Tennor Holding.

The French asset manager said on Tuesday that Tennor last month made a “partial repayment” on a bond H2O holds, which would reduce the amount of debt outstanding by €250mn.

H2O added that this would allow it to begin the “first repayment phase” in the coming days, more than two years after the asset manager hived off illiquid assets linked to Windhorst, trapping the savings of thousands of smaller investors.

“With this new milestone, H2O reaffirms its commitment to the full disposal of the segregated assets,” the company said.

The announcement suggests that investors will initially receive only a portion of the €1.6bn frozen in specially-created sub funds that H2O set up to hold Windhorst-linked assets in 2020, after France’s financial watchdog asked it to suspend several of its flagship funds because it was worried about the valuation of these assets.

Whilst the assets were valued at €1.6bn at the time they were split off, in December 2021 H2O wrote them down to €1bn.

On Tuesday, the AMF also said it would fine Crastes €15mn, plus a €3mn penalty for chief investment officer Vincent Chailley, over what it has previously described as “grave” rule breaches related to the Windhorst-linked investments.

Once a well-respected money manager that oversaw €30bn of assets, H2O has lurched from crisis to crisis since the Financial Times reported the scale of its investments linked to Windhorst in 2019.

Windhorst shot to fame in Germany as a teenage entrepreneur in the mid-1990s, but endured a bruising downfall that culminated in a suspended jail sentence in 2010 for alleged “breach of trust”.

H2O is also under investigation by the UK’s Financial Conduct Authority and is facing litigation in France from Collectif Porteurs H2O, a group of more than 3,000 clients, which last year obtained a court order to appoint an expert to review H2O trades linked to Windhorst.

H2O said on Tuesday that all of its investors would be “treated equally in the execution of these repayments”.

Windhorst first struck a deal to buy back illiquid Tennor bonds and stocks in April 2020. In May 2021, Tennor restructured debt at its subsidiaries into a new €1.45bn bond, but then missed a deadline to repay this at the start of 2022, after the firm was briefly declared insolvent in a Dutch court.

H2O’s announcement suggests it has received a smaller initial repayment than the €550mn that Windhorst said he was set to repay in a matter of weeks in August.

H2O did not respond to a request for comment. Windhorst declined to comment.

In a statement following the AMF’s announcement, Collectif Porteurs H2O said the reimbursement would not substantially reduce the losses suffered by investors, as H2O had already previously significantly written down the Tennor related debt. “We will now turn to the courts to obtain the reimbursement of our blocked savings,” said the group’s president Gérard Maurin.


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