Value of funds under troubled Lime Asset Management Co. more than halved or $1 billion, leaving little left for payout, a latest reevaluation showed.

The Financial Supervisory Service (FSS) and Korea Financial Investment Association (KOFIA) said Sunday that Samil PricewaterhouseCoopers (PwC)’s due diligence readjusted the net value of Lime’s 262 private equity funds including two umbrella funds that the company suspended withdrawals at 2.81 trillion won as of Feb. 20, off as much as 1.22 trillion won ($1 billion) from their original balance of 4.03 trillion won. The losses could swell after the auditor finishes its due diligence on Lime’s trade financing funds next month.

An official from the hedge fund said the net loss of the two master funds - Pluto FI D-1 and TethysⅡ- amounted to 483.2 billion won when excluding overlaps between umbrella funds and feeder funds. Losses on non-trade financing funds are estimated at 634.1 billion won.

Lime estimated the trade financing funds worth 240 billion won affected by its redemption suspension to lose about 50 percent, but the FSS expected the loss rate could reach 100 percent in worst cases.

Meanwhile, three local securities firms engaged in a total return swap (TRS) contracts with Lime announced that they have decided to pull money from the affected funds against the request from Daishin Securities who asked the brokerages not to redeem the investment before customers. Under the agreement, the three brokerages that offered leverage to Lime in return for commissions have the right to first payment in liquidation. Daishin had earlier warned that it would file a lawsuit against them if they recoup the investment and incur bigger losses to individual investors.

Lime’s TRS-based leverage is estimated at 670 billion won, with Shinhan Investment Corp. licensed to 500 billion won, KB Securities Co. 100 billion won and Korea Investment & Securities Co. 70 billion won.

By Kim Je-lim and Choi Mira

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]