'The 2nd Lime Incident'... Alpenroute Asset Management Also Considering Redemption Suspension

[Asia Economy Reporter Park Jihwan] Following Lime Asset Management, which caused a fund redemption suspension crisis involving funds worth over 1 trillion won, Alpenroute Asset Management is also considering suspending redemptions for some of its funds. The fallout from Lime Asset Management's fund redemption suspension is spreading to other private equity fund managers.

According to the financial investment industry on the 27th, Alpenroute Asset Management is reviewing the postponement of redemptions for 26 funds (with a total subscription amount of 230 billion won) that have total return swap (TRS) contracts with securities firms, including Montblanc4807.

Alpenroute Asset Management appears to be facing a temporary liquidity crisis after sudden loan recall requests from securities firms. This is because securities firms are notifying that they will consecutively terminate the TRS contracts that supported the fund management capital.

Mirae Asset Daewoo, Korea Investment & Securities, and others, which have provided prime brokerage services (PBS) to Alpenroute Asset Management, are reportedly recently notifying that they will recover about 46 billion won in funds supported through TRS contracts. Korea Investment & Securities also requested redemptions for part of the amount invested with its own capital.

Accordingly, Alpenroute Asset Management is reportedly prioritizing the review of redemption suspension for funds worth 2 billion won, whose redemption dates are approaching on the 28th. If Alpenroute Asset Management proceeds with the redemption suspension, it will be the second large-scale redemption postponement case since Lime Asset Management's Thetis fund in September last year.

Other funds involving TRS capital will also face redemption request cycles sequentially starting from mid-next month, and if TRS capital is withdrawn, normal operation is expected to become difficult.

TRS is a product that transfers both credit risk and market risk of underlying assets such as stocks and bonds. The buyer pays the total return (interest income and capital gains) generated from the underlying assets to the seller, and the seller pays agreed interest or fees.