The fallout from the collapse of Strand Capital has spread as far as Cyprus, impacting investors in a bond listed on the country’s stock exchange.
Euler Investments London Plc is an investment bond promising a 7% annual return until 31 December 2021. However, its latest payment to bondholders was deferred because Strand Capital, a wealth manager with £100 million in assets under management, went into administration in May 2017.
In what is a very convoluted set up, Euler is a company building an investment portfolio of boutique asset management firms, but it is structured as a Cyprus-listed bond.
Euler has been loss-making since launch in 2016 and over the year to June 2017 it made a loss of £863,000, mainly due to a write down of its investment in Barika Capital, a fund management firm.
Euler invested £342,700 in Barika to support its growing asset management business and made a commitment to invest in its Relative Return Ucits fund as a core holding. Barika had further commitments from other IFAs and discretionary fund managers in excess of £10 million, including Strand Capital, which made the largest commitment.
However, when Strand went into administration, the fund’s board liquidated the vehicle. As a result, Euler had to defer the 2017 payment of £79,000 interest to bondholders.
The company told Wealth Manager that it has written to the joint administrators on several occassions to find out information but have not had a response.
Still, it is not all gloom and doom at the fledgling company, which has big plans for its London-based boutiques.
Euler has invested in former Williams de Broё man Paul Denley’s discretionary business Oakham Wealth Management.
Oakham, originally set up as SC Davies, was rebranded in December 2017 as it brought in Old Mutual’s John Ventre and François Zagamé. Oakham does not disclose AUM.
Euler bought a 5% stake in the company for £45,000. It said it hopes to add to this later in the year to help the business grow and increase profitability.
It has also invested in derivatives investment group Thameside Markets (a wholly owned subsidiary), which has successfully launched a Long Volatility Hedge fund, managed by Will Kuhl and Mike Dinan. It has an AMC of 2% with a 30% performance fee.
Its investment management arm Thameside Investment Portfolios (TIP) has, according to Euler, ‘already attracted significant funds for investment’ and will launch its products in April.
TIP has partnered with Edison Investment Research to launch the Relative Return Illuminator ETP, which will invest in the top 10 UK stocks generated by Edison’s Illuminator model. It has an annual management charge of 0.7%, plus a 20% performance fee above a high water mark.
This is run by ex-Redmanye Bentley stockbroker Peter Long and ex-Merrill Lynch trader Peter Boden.
The company has also launched three model portfolios with 0.5% management fees.
Following the launch, Euler expects to start earning a share of the management and performance fees. The company said: ‘To date, we have had indicated investment interest exceeding £19 million for the first product, thus giving us the potential to generate significant revenue.’