PARIS, June 20 (Reuters) – French investment bank or investment company Natixis defended its UK-based asset-management division H2O on Thursday after fund rankings company Morningstar put the machine under review over its holdings, causing a sharpened fall in the French bank’s stocks. Morningstar, which gives analysis and ratings on funds, said H2O kept “highly illiquid bonds” issued by several companies related to German business owner Lars Windhorst, 42, a one-time teen business owner and owner of Tennor Holding, previously known as Sapinda. Morningstar also questioned the existence of H2O’s leader, Bruno Crastes, on the board of Tennor Holding, given H2O’s exposure to Windhorst’s investments.
The ratings group announced its overview of H2O after a Financial Times record on the asset manager’s contact with Windhorst’s businesses. Natixis said in a statement about the Morningstar decision. H2O’s CEO Crastes rejected his firm experienced any liquidity concern and said it acquired “significant” cash readily available. Natixis, which owned 49.99% of H2O on Dec. 31, 2018, said the potential conflict appealing was not proven.
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A spokesman for Tennor Holdings declined to comment. A setback could be proved by H2O issue for Natixis, the organization and investment bank arm of unlisted French cooperative lender BPCE. Natixis has said asset management was a certain area it wished to increase, along with insurance and payment services. Mediobanca said describing the Natixis share price drop as “a severe reaction” and Jefferies analysts said it was “overdone”. In an emailed statement, Morningstar’s research analyst Francesco Paganelli said the private bonds in question accounted for about 5% of the portfolio, well within the 10% limit arranged by European regulators for the type of fund, known as UCITS.
Morningstar said. A new rating will be released after more info is collected and analysis completed. The holding of liquid assets can be a problem for fund management companies like H2O, which allow investors to withdraw funds on a daily basis. The sharp move around in Natixis talk about price could be partly because the news followed the gating of Neil Woodford’s flagship collateral income fund due to redemptions, which also led to scrutiny of its illiquid investments.
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