As investors continue pulling money from an investment vehicle run in partnership with scandal-struck Swiss asset manager GAM, a finance firm has seen one of its funds almost halve in size within a week.
The GAM Greensill Supply Chain Finance fund aims to make money by paying company suppliers early in return for a premium, and its assets fell from €736m to €391m in the space of a week. This is a catastrophic plunge from over €2.1bn that was in the fund just a month ago.
A Controversial Year
GAM has been making headlines since summer 2018 after it suspended fund manager Tim Haywood, who was found to have invested large amounts in highly illiquid bonds with links to Greensill Capital.
The founder of Greensill Capital, Lex Greensill, is a close confidant of former UK Prime Minister David Cameron, and is seen by some as an innovative financier who helped businesses unlock cheap funding.
Critics, however, point to his high tolerance for taking risks and use of complex financing structures.
GAM’s Haywood invested his absolute return bond funds in various unconventional bonds arranged by Greensill, which have proved themselves difficult to sell on. He was later dismissed for gross misconduct – something which he is appealing against.
Small Returns
The GAM Greensill fund was set up in 2016, aiming for a small return over the rate offered by London interbank by investing in the assets Greensill sources – its total return to date is just under 0.5%.