Natixis gets a boost as Morningstar resumes coverage of H20 fund

Credit: REUTERS/Charles Platiau

Natixis-owned H2O Asset Management got a boost on Thursday as ratings firm Morningstar resumed its coverage of the firm's 'Allegro' fund, after suspending it on concerns over illiquid assets held by the fund.

By Matthieu Protard

PARIS, June 27 (Reuters) - Natixis-owned CNAT.PA H2O Asset Management got a boost on Thursday as ratings firm Morningstar resumed its coverage of the firm's 'Allegro' fund, after suspending it on concerns over illiquid assets held by the fund.

The suspension of the fund's rating on June 19 triggered massive withdrawals, which led to a slump in Natixis' shares last week.

Morningstar said on Thursday that it was resuming coverage of H2O with a "neutral" recommendation.

In reaction to the rating suspension, H2O sold some illiquid assets and stopped charging entry fees on its funds.

In an emailed statement, H2O said its assets under management stood at 27 billion euros ($30.7 billion) on Wednesday after "substantial" inflows since Monday. H2O's assets under management were 31.3 billion euros as of March 31.

The holding of illiquid assets can be a problem for fund management firms such as H2O, which allows investors to withdraw funds on a daily basis.

Natixis's shares, which slumped by around 14% late last week after the suspension, were up 2.8% by 0945 GMT. The stock remains down by 4.9% since the start of 2019. Natixis owns 50.1% of H2O.

Investment bank UBS upgraded its recommendation on Natixis shares to a "buy" on Thursday, saying H2O had done the right things after Morningstar had put its rating "under review".

UBS said Natixis shares now traded at a 33% discount compared to their peers, but the Swiss bank's analysts said the discount was too big given Natixis's dividend payout ratio.

(Reporting by Matthieu Protard and Inti Landauro; Editing by Sudip Kar-Gupta and Susan Fenton)

((Inti.Landauro@thomsonreuters.com;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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