African Reserves

Lars Windhorst agrees to repay 550 million euros to H2O in “weeks”

Lars Windhorst has pledged to hand over more than €500m to H2O Asset Management within weeks, which would clear a significant chunk of the controversial financier’s debts to the struggling investment firm.

Windhorst, a 45-year-old German entrepreneur with a checkered business history, is late repaying more than a billion euros to H2O, a former star of the European asset management industry who is being questioned by several regulators over his entanglements with the financier.

Windhorst told the Financial Times his investment firm Tennor will soon repay hundreds of millions of euros after a turnaround in the fortunes of his eclectic portfolio of businesses, which range from a loss-making lingerie maker to an African agricultural company .

“Our diverse set of businesses across all sectors and geographies performed strongly in the first half of 2022 and thanks to this we managed to increase liquidity to over €500 million across the various group entities. “, did he declare. “As debt reduction remains a priority, we will pay no less than 550 million euros in cash to H2O Asset Management in the coming weeks.”

If the repayment is made on time, it would pave the way for H2O to provide an early distribution to those with money trapped in its funds, which range from retail investors in France to South Korean asset managers.

Once a well-respected fund manager overseeing €30bn in assets, H2O has gone from crisis to crisis since the FT revealed the scale of its outsized bet on Windhorst in 2019. The following year, the company investment firm was forced to temporarily halt redemptions on its core funds after the French market regulator raised concerns about its ties to the financier. Two years later, investors’ money is still stuck in the so-called H2O “side pockets” set up to house 1.6 billion euros of these hard-to-sell assets.

In a letter to investors last month, H2O revealed that Tennor had missed the January deadline to repay more than 1.1 billion euros.

In lieu of any cash, H2O also revealed that Windhorst handed over $106 million worth of convertible bonds linked to Gett, a taxi app startup that was to be listed via an acquisition company at special calling. The planned listing collapsed soon after due to the company’s substantial exposure to Russia, meaning H2O investors have so far received nothing from the arrangement.

Despite the setbacks, H2O told investors it was “committed to enabling” their first repayments this year. Asked by the FT why he thought this was the case, he said: “We have understood loud and clear that it is of the utmost importance for our investors to secure the repayment of some of the assets held in the side pockets. in 2022.”

“This is not a guarantee but a strong and active commitment from H2O,” the asset manager added.

This is not the first time Windhorst has publicly promised a quick refund.

A year ago, he told the FT that he expected to “pay off much of H2O’s debt” by the end of 2021. Instead, H2O ended up writing the value of its Windhorst-related investments after a Dutch court briefly ruled Tennor to be insolvent.

Earlier, at the height of the coronavirus pandemic, the financier struck a deal to buy those hard-to-sell assets from H2O at a discount. But the deal fell apart amid regulatory scrutiny, leading German financial watchdog BaFin to file a criminal complaint. Windhorst later claimed the matter had been settled.

H2O is under investigation by the French market regulator and the UK Financial Conduct Authority. In recently filed 2021 accounts, the company revealed that it recorded an £890,000 provision last year in relation to one of its regulatory investigations.

The company’s auditor Mazars, however, warned there was ‘material uncertainty’ surrounding the amount of the charge, while H2O also revealed it had yet to make a provision in relation to an investigation. from the FCA for “alleged non-compliance” with several of the regulator’s principles.

H2O told the FT that while it was “unable at this stage to predict the consequences of the investigations”, it expects to continue operating “based on the current cash balance and reserves, business forecasts and capital resource adequacy forecasts.”

The asset manager has reaped gains this year thanks to capricious bets on the direction of government bonds and currencies. While excessive exposure to the Russian ruble severely hurt its flagship 1.7 billion euro fund when the country’s President Vladimir Putin ordered an invasion of Ukraine in February, the currency’s rebound l has returned to a return of more than 12% since the start of the year.