LM Investment Management Ltd, an Australia-based fund manager with assets under management last year of as much as A$3bn($3.1bn), has been placed into voluntary administration, International Adviser has learned.
The news was contained in an email notice sent Tuesday morning to clients, which said that the measure had been taken by the company’s board “after full consideration of its obligations as a company and its duties to ensure it acts in the best interests of investors”.
“This is not liquidation or receivership, and neither LMIM nor any of the Funds is in liquidation or receivership,” the statement added.
“Events over the past couple of weeks, however, have meant that the company and the funds are in imminent jeopardy of being unable to meet creditor obligations, and hence the appointment.”
The statement did not say what the recent events that caused the company to be unable to meet its creditor obligations were.
However, as reported here in December, the company had seen one of its funds taken over by another fund management group, Trilogy Funds, after a unit-holder meeting in Sydney in November. That fund was one of three feeder funds that had been closed to new investment in March 2009 due to problems that arose during the global financial crisis.
In February, the company issued a statement it said was aimed at providing “further comfort to closed-fund investors”, noting that its orderly sales of assets from its LM First Mortgage Income Fund was continuing, and that periodic capital distributions to investors would commence in 2013.
In this statement, chief executive Peter Drake noted that the company had successfully renegotiated its loan facility with the fund’s current financier, Deutsche Bank AG.
Drake said the facility, capped at A$25m, would be in place from January 2013 until June 2014, with an option for a fuarther 12 months at LM's discretion.
Company officials were not immediately available for comment on Tuesday afternoon London time, and someone who answered the phone of the company’s London office referred calls to LMIM’s Australia head office.
In its statement to advisers today, LMIM noted that voluntary administration is a “proactive approach” companies opt for when they wish to bring in independent financial advice.
“This step is believed to be in the best interests of protecting the funds and maximising returns for investors, and prevent LMIM company cash flow issues going forward,” the statement said.
Many investors were likely to have questions over the next few weeks, and although "there is an enormous amount of work to be undertaken...those questions will be answered," it went on.
"Please bear with us though, as our response may not be as prompt as usual, due to the expected initial high volume of queries."
As recently as the third quarter of 2012, LM appeared to be in an expansion mode, having obtained registration with the Monetary Authority of Singapore to market one of its funds to accredited investors there. At that time, it was reported to have AUM of A$3bn, and a staff of 130 worldwide, operating from eight offices in Australia, New Zealand, Hong Kong, Bangkok, London, Dubai and South Africa.
To read and download a copy of LM's notice to clients, click here.