Lime Fund 'Tetis 2' Loss Rate Up to 70%

Draft Due Diligence Report on Fund Suspension Released
Final Results to Be Announced Mid-Month

[Image source=Yonhap News]

[Asia Economy Reporter Park Ji-hwan] According to the results of an audit conducted by an accounting firm on Lime Asset Management's redemption suspension funds, which caused controversy last October due to a large-scale redemption halt, the 'Tetis No. 2' fund?the first to suspend redemptions?is reported to have a loss rate of up to 70%. Financial authorities plan to announce the final audit results around mid-month.

On the 3rd, according to sources in the financial investment and accounting industries, Samil Accounting Corporation, which was entrusted with auditing Lime Asset Management's redemption suspension funds, delivered a draft report containing the audit details of the master fund Tetis No. 2 to the Financial Supervisory Service and Lime Asset Management. Tetis No. 2 is a master fund mainly composed of convertible bonds (CB) and bonds with warrants (BW). This fund was sold to investors for a total of approximately 400 billion KRW.

Samil Accounting Corporation reportedly evaluated the redemption possibility of the underlying assets such as bonds held by Tetis No. 2 by categorizing them into grades A to C. Grade A indicates a high likelihood of redemption with a low loss rate, while grade C indicates the opposite.

Some analysts estimate, based on these grades, that the loss rate of Tetis No. 2 could range from a minimum of 40% to a maximum of 70%. However, the draft report by Samil Accounting Corporation is said not to have directly indicated the loss rate. If the loss rate is 70%, the loss amount would reach up to 280 billion KRW.

The Financial Supervisory Service stated that since the audit on the fund is still ongoing, it cannot disclose related details yet. The FSS plans to announce the audit results regarding the exact loss amounts and redemption possibilities for each Lime Asset Management fund starting mid-month.

Earlier, Lime Asset Management announced in October last year that it would postpone repayments and redemptions for funds related to three master funds, including Tetis No. 2. The three master funds also included 'Pluto FI D1' and 'Pluto TF1', which invest in private bonds. If all three funds show a 70% loss rate, there are concerns that investors could suffer losses exceeding 1 trillion KRW in total.

Within the securities industry, there is also analysis suggesting that the loss scale of the Pluto TF1 fund could be larger than that of Tetis No. 2. The size of this trade finance fund is about 600 billion KRW, and the U.S. hedge fund operator International Investment Group (IIG), which is the investment destination of Lime Asset Management's trade finance fund, was recently subjected to asset freeze measures after having its registration revoked by the U.S. Securities and Exchange Commission (SEC). It is reported that Lime Asset Management invested 40% of the 600 billion KRW trade finance fund in the IIG hedge fund.

This content was produced with the assistance of AI translation services.