IoM regulator investigates another troubled sustainable fund

Added 6th March 2017

The Isle of Man Financial Services Authority (IOMFSA) has appointed a controller for Quadris Environmental Forestry Fund PCC, a fund investing in Brazilian teak plantations, its third such move against a sustainable fund in less than a year.

IoM regulator investigates another troubled sustainable fund

On 2 March, IOMFSA confirmed that it is looking to officially liquidate stricken Nicaraguan bamboo fund Eco Resources Fund. The regulator also wound up the New Earth Group of Funds in July 2016, which invested in recycling and renewable projects.  

Brazilian teak

The latest fund, Quadris was set up on the Isle of Man as a multi-class qualifying fund and invests in sustainable forestry plantations in Brazil that are managed by a company called Floresteca SA.

Launched in 2001, it has more than £100m ($122.9m, €115.7m) invested in teak plantations. The minimum investment is $50,000.

Describing forestry as a “unique asset class”, Quadris said that the fund invests in teak as it is “gold among woods”. The company’s website states that the demand for teak has not been met in the past 25 years and “its average value has risen to figures above 5% each year”.

Local newspaper IOM Today reported that the fund posted a $20m loss in 2016, with auditors saying there were significant concerns about the company’s ability to continue as a going concern.

Letters to shareholders

In a letter on 15 February, Quandris’s directors told shareholders that they had decided to terminate fund manager Blue Sea International Limited’s (BSIL), effective immediately.

BSIL is incorporated on the Isle of Man and licenced by the island’s Financial Supervision Commission.

Estera Fund Services (Isle of Man) was named as the replacement fund manager.

A subsequent letter to shareholders, dated 20 February, advised that IOMFSA had named Gordon Wilson as controller of the Quadris fund.

He was previously appointed adviser to the fund on 9 September 2016.

Wilson wrote: “The appointment as controller means that I am now the main decision maker for the operation and oversight of the affairs of the fund, However, the fund’s remaining directors, Mr Thorn and Mr Mudge, will remain in office and will be assisting me where necessary.”

An investor meeting has been scheduled for 22 March.

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About Author

Kirsten Hastings

Senior Reporter

Kirsten is a senior reporter for International Adviser, covering global news stories about the financial services industry. She joined Last Word Media in October 2015 after two years working as a reporter covering the staffing and recruitment industry. Kirsten has a Masters in Financial Journalism from the University of Stirling. 

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