ZURICH / LONDON: The asset management arm of Zurich-based Credit Suisse said on Monday it has suspended redemptions from its $10 billion supply chain finance funds over concerns about the value of the funds' investments.
In a note to investors, Credit Suisse Asset Management said that "a certain part of the subfunds' assets is currently subject to considerable uncertainties with respect to their accurate valuation".
London-based Greensill Capital helps manage the supply chain finance funds, originating and processing the credits which go into the funds and helping to secure investors.
Greensill, into which the SoftBank Vision Fund, part of Japan's Softbank Group, has invested around $1.5 billion in recent years, declined to answer questions about the funds on Monday.
Spokesman James Doran said in a statement: "Greensill acknowledges the decision by Credit Suisse to temporarily gate Supply Chain Finance Funds dealing in Greensill-sourced assets. We remain in advanced talks with potential outside investors in our company and hope to be able to update further on that process imminently."
The Supply Chain Finance funds aim to extend credit to companies secured against money they are due to receive from the sales of goods and services that have been delivered, but not yet paid for.
Traditionally this kind of invoice factoring is seen as low risk, but the Credit Suisse funds also had the right to invest in credit assets outside traditional supply chain finance, and Greensill selected borrowers which did not have traditional trade receivables, publicly available accounts for borrowers show.
Nonetheless, Credit Suisse marketed the funds as 'low risk' investments partly on the basis, saying in January that almost all the money was insured. Credit Suisse on Monday declined to identify the insurers or confirm if the cover was still in place.
Any insurance that is in place does not cover all losses.
In accounts filed in January, Greensill said the insurance policies carried first loss clauses which meant it faced potential losses of up to $1.04 billion in the case of defaults. Greensill told Reuters in January the probable loss was only $59 million.
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