7IM coughs up £4m to compensate for losses in dual fund wind-up

£33m 7IM Absolute Return Portfolio and £20m Income Portfolio had hefty exposure to defunct Guernsey bond fund

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Seven Investment Management (7IM) has shelled out £4m to compensate investors for losses sustained in two funds that were suspended over liquidity issues.

Details of the provision were included in the DFM’s annual results for the year to 31 December 2021.

Last March, 7IM suspended dealing in the £33m 7IM Absolute Return Portfolio and the £20m Income Portfolio due to their “material exposures to two illiquid holdings” which it was unable to sell. One of the holdings was identified as Xenfin Securitised Debt, a Guernsey bond fund, which had been in liquidation since October 2019.

The pair of funds, which were inherited from Tcam following its acquisition in 2018, were partially merged with the 7IM Real Return and AAP Income funds on 25 June 2021 to provide an exit route for shareholders to get most of their money back. The residual assets are in the process of being liquidated.

7IM said the £4m ‘prospective loss’ was designed to give investors the greater of the financial value recovered from the liquidation or the ‘proxy value’, as calculated by the performance of the IS Flexible Investment peer group from the point of liquidation in 2019.

Portfolio Adviser reached out to 7IM for comment but did not hear back in time for publication.

7IM’s profit before tax nearly doubled in 2021 to £9.5m from £5.2m the year before, as its assets under management ballooned to £21bn.

This was in large part down to its highly acquisitive 2020 in which it snapped up Partners Wealth Management and Findawealthmanager.com. Both companies continue to operate independently under the 7IM umbrella.

Group revenue increased by 31% over the year to £92.3m, up from £70.1m in 2020.

See also: 7IM ups money market exposure in 19 funds days after FCA voices concerns

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