Lime Fund 60% Open-End... Excessive 1.7 Trillion KRW Redemption Suspension

[Asia Economy Reporter Park Jihwan] It has been revealed that more than 60% of the private equity fund capital managed by Lime Asset Management is in open-ended products that allow investors to redeem their investments before maturity. This is a significantly higher figure compared to the overall private equity fund capital, where the proportion of open-ended funds is around 40%. This structure made it difficult to avoid a large-scale suspension of redemptions if investors attempted to withdraw their funds all at once.

According to the Financial Supervisory Service and the Korea Financial Investment Association as of the end of last year, out of Lime Asset Management’s private equity fund assets totaling 4.3516 trillion KRW, 63.1%, or 2.7459 trillion KRW, were operated as open-ended funds. This is about 20 percentage points higher compared to the overall private equity fund assets of 412.409 trillion KRW, where open-ended funds account for 43.3% (178.4007 trillion KRW).

In particular, Lime Asset Management’s core mixed-asset funds had an even higher proportion of open-ended funds at 64.6%. The proportion of open-ended mixed-asset funds among all private equity funds is only 40.6%, resulting in a gap of 24 percentage points.

Lime Asset Management’s mixed-asset funds include three master funds?'Pluto FI D-1', 'Tetis 2', and 'Pluto TF 1'?which have had redemptions suspended since last October due to liquidity shortages. Lime Asset Management decided to suspend redemptions for these funds last year, with the total amount of suspended redemptions reaching 1.5587 trillion KRW.

Additionally, this month, the 'Credit Insured Trade Finance Fund' invested 120 billion KRW in these master funds, raising concerns about further suspension of redemptions. This fund is set to mature at the end of March.

Typically, private equity fund managers operate mixed-asset funds as closed-ended funds. This is because mixed-asset funds often invest in real assets such as real estate, ships, aircraft, and intellectual property rights, which have low liquidity.