Delayed Loss Rate Confirmation and Gloomy Outlook... Anxious Lime Investors (Comprehensive)

Delay in Seller's Data Entry Procedures
Additional Evaluation Procedures Required for Some Sub-Funds

[Asia Economy Reporters Kim Hyo-jin and Park Ji-hwan] Investor anxiety is escalating as the confirmation of loss rates for some Lime Asset Management’s redemption suspension funds, which are expected to incur losses in the trillion-won range, is being delayed. Once the asset manager reflects the net asset value (NAV) adjustment results for the redemption suspension funds, investors can directly check the current loss rates through the sales companies’ computerized input procedures, but this timing is being postponed.

According to the financial investment industry on the 24th, the NAV adjustment of Lime Asset Management’s funds and the subsequent computerized input procedures by sales companies such as banks and securities firms, originally expected to be completed by the 21st, have been postponed until the 27th. Since the 14th, Lime Asset Management has adjusted the NAVs of the parent funds 'Pluto FI D-1' and 'Tethys 2' and completed the first round of NAV adjustments and computerized processing for the child funds overlapping assets with these two parent funds.

Accordingly, on the 17th, the sales companies confirmed the adjusted NAVs of the child funds and reflected them in customer accounts. The loss rates of some child funds confirmed at that time were reported to be around 6-40%. However, the NAV adjustment work for child funds related to the Pluto TF (Trade Finance Fund) and Credit Insured (CI Fund), which began on the 18th, as well as the NAV adjustments for child funds overlapping assets with three other parent CI funds, is being delayed.

As scheduled, the additional computerized input procedures following the NAV adjustments were supposed to be completed by the 21st, allowing investors to check the NAV adjustment results of the child funds they subscribed to on the 22nd.

A financial investment industry official said, "Some child funds have assets they invested in themselves, so additional evaluations are necessary," adding, "It seems that these circumstances are causing the delay in the procedures." The NAV adjustments reflected the results evaluated by Lime’s Collective Investment Property Valuation Committee based on the fund accounting audit by Samil Accounting Corporation.

The investment principal of Lime Asset Management’s private fund investors is currently short by more than 1.2 trillion won compared to asset value. According to the Financial Supervisory Service and the Korea Financial Investment Association, as of the 20th, the net assets of 262 private funds managed by Lime Asset Management amounted to 2.8142 trillion won, which is 1.2203 trillion won less than the subscription amount of 4.0345 trillion won.

The fact that net assets are less than the subscription amount means that investors are experiencing losses to that extent. The gap between net assets and subscription amount surged from about 280 billion won on the 12th to 900 billion won on the 14th, exceeded 1 trillion won on the 17th, and has grown to over 1.2 trillion won.

The problem lies ahead. Lime Asset Management’s fund asset NAV adjustments are ongoing, and especially when the audit results of the Trade Finance Fund, which is expected to incur total losses, are released, investor losses are expected to snowball. The audit results of the Trade Finance Fund by Samil Accounting Corporation are expected to be released by the end of next month.

Lime Asset Management anticipates that the NAV of the 240 billion won Trade Finance Fund will fall by about 50%, but the Financial Supervisory Service views it as a total loss.

Regarding this, Lime Asset Management stated, "The investment structure of the redemption suspension funds is such that customers subscribe to child funds, which then invest directly or indirectly through total return swaps (TRS) in parent funds, and the total subscription amount and net assets of the company’s funds inevitably overlap significantly."

Meanwhile, according to data received by Kim Byung-wook, a member of the National Assembly’s Political Affairs Committee from the Democratic Party of Korea, from the Financial Supervisory Service, as of the end of December last year, nearly half (46%, 1,857 accounts) of the 4,035 individual accounts invested in 173 Lime Asset Management funds belonged to investors aged 60 or older.

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