According to InvestmentNews, alternative asset management company GPB Capital Holdings has notified investors and custodians that its different private placement funds have recently suffered 25-73% losses in value. It’s largest funds, the GPB Automotive Portfolio and GPB Holdings II—together, these two raised $1.27B from investors—have experienced 38% and 25.4% drops, respectively. Such significant losses are clearly not good for investors, who, collectively, have invested about $1.8B in all of the GPB funds.
These private placement funds are invested mostly in waste management and car dealerships and they, along with GPB Capital Holdings, have come under intense scrutiny by both the government and investors. Set up in 2013, the company last year suspended all redemptions involving its funds. An auditing company retained by GPB Capital stepped down in November not long after questions regarding the company’s accounting practices and sales methods arose.
About 60 broker-dealers have sold GPB funds to investors. Advisers usually make a substantial commission for selling the private placements—a typically higher rate than what they’d get for selling mutual funds.