Three Icelandic pension funds have lost a combined ISK 610 million ($4.92m/€4.48m) in two Gamma Capital Management funds whose assets have plummeted dramatically, Vísir reports. Gamma’s new directors are now consolidating and investigating payments related to the funds due to suspicion of mismanagement.
Investors in Gamma’s real estate funds Gamma: Novus and Gamma: Anglia received notice last Monday that Novus’ assets had crashed by 99% and Anglia’s by 60%. Novus operated the real estate company Upphaf, which has built hundreds of apartments in the Reykjavík capital area in recent years. Anglia’s investments, on the other hand, were tied to real estate projects in the UK.
Directors make departure
Gamma’s CEO since 2017 Valdimar Ármann left the company four weeks ago, while Novus’s fund manager Ingvi Hrafn Óskarsson also resigned from his position recently. Máni Atlason took over as CEO of the company last weekend, and says his focus has been on informing investors and creditors about the state of the two funds.
Máni attributes the funds’ losses to several factors. “The expected sale of the real estate company Upphaf which was operated by Gamma: Novus has been re-evaluated, the cost increases have been underestimated, and we are using a different approach to assess the company’s interest costs in the future. It’s a similar situation with Gamma: Anglia, and our consultants in the UK say projects are in an uncertain position and have therefore been downgraded.”
Losses could affect workers
VR labour union’s Director Ragnar Þór Ingólfsson says he hopes that the affected pension funds launch an investigation into the matter. Ragnar says the losses could have far reaching effects, including higher premiums for workers. “There seems to be a similar aftershave smell to this case as many cases following the banking collapse,” he stated.
According to Kjarninn’s sources, nearly all of the two funds’ investors are calling for a thorough investigation to find out what caused their losses. Gamma’s directors are expected to meet with the funds’ investors and creditors on Monday and say their focus is now on saving the assets that remain. Gamma is a subsidiary of Kvika bank, whose market value has dwindled in recent weeks, particularly after the state of the Novus and Anglia funds came to light.