Tuesday 21 November 2017

IFSC fund manager merged with parent after losses

Peter Flanagan

Peter Flanagan

AN IFSC-based fund manager is to be merged after its assets under management (AUM) dropped by a third due to the downturn and its effect on the hedge fund industry.

Accounts just filed for Pioneer Alternative Investment Management Limited (PAIML) show AUM plunged to €1.4bn during the year to December 31, 2011, down from €2.1bn a year earlier.

A number of single manager funds under the business saw their AUM decline substantially during the year, with several either merged or closed.

In the 'fund of hedge funds' business, AUM slid 23pc to €1.3bn. The company runs a number of different funds, made up of 'fund of funds', where capital is placed with a portfolio of investment funds rather than directly into stocks or bonds. A single manager fund is where capital is invested with a single fund manager.

Assets under management are generally seen as the key metric in the funds industry, rather than profit and loss. The company narrowed losses after tax to €400,000 from €3.7m.

In 2010, Pioneer said it would roll the investments function with PAIML into Pioneer's parent company. That decision was followed by the sale of a number of PAIML's business to Pioneer Investment Management and will result in PAIML ending its regulated trading activities by the end of June this year.

PAIML is being sued in a number of countries for losses resulting from the notorious Bernard Madoff ponzi scheme scandal. PAIML acted as an investment manager or adviser to funds that indirectly invested with Madoff, whose $50bn (€39.2bn) fraud became public in 2008, wiping out a number of investors.

The liquidators of a Cayman Islands-based fund have taken action for $262m plus "unquantified" damages while a civil action in Austria is claiming €50,000. The company is also facing litigation in the US, and has been named as one of 60 defendants in a claim for the return of fees worth a total of $400m plus punitive damages worth more than $2bn.

The company said it intends to "defend these proceedings vigorously". Legal costs almost doubled to €14.1m.

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