A live music festival generated headlines for irregularities, including financial losses before the event even took place. finews.com reveals Ruvercap Investment's involvement.

While an Austrian asset manager ascertains alleged losses for investors of Ruvercap Investment, a worrying picture of the Zurich-based fund's allocation strategy is emerging: insolvent companies in Serbia, a bank in Bosnia, alleged luxury hotels in the Balkans, and a fertilizer supplier in South Africa.

Ruvercap's investments frequently represented high-risk financing objects; Graubuendner Kantonalbank plowed more than 70 million Swiss francs in (the association cost director Thomas Huber his job last week, as finews.com reportedreported).

Ruvercap Relinquishes

At the same time, Ruvercap Investment presented the private debt funds as a vehicle with «investment grade protection,» according to documents seen by finews.com. It invested in a broad portfolio of covered debt claims in Switzerland, Europe, and the U.S, according to the documents.

The strategy foundered when debt repayments allegedly faltered; the funds were frozen last year, and Ruvercap Investment was forced to give up its advisory role.

Weighty Main Sponsor?

Meanwhile, a small local music festival in Biel, Vibez, was also mired in losses – reportedly a million Swiss franc sum. The loss-making festival was bankrolled, indirectly, by Ruvercap Investment, finews.com has learned.

In effect, Swiss pension funds and other investors sank money into a three-day, moderately successful music festival. The lack of visitors followed an embarrassing series of editorial reporting beforehand: the festival had claimed its main sponsor was Emirates. It was forced to remove the airline's logo from promotional materials after Emirates objected.

Misrepresenting Ticket Sales

Swiss daily «Bieler Tagblatt» (behind paywall, in German) also revealed that the Vibez festival organizer (pictured below) visited Dubai to look for funding. Via a middleman, Emirates-based Tabarak Investment Bank was meant to financially back Vibez, in return for ticket proceeds as well as a 30 percent cut of profits.

The deal fell apart after a representative of Vibez allegedly misrepresented the amount of ticket sales.

Ausriss

The debacle wasn't Ruvercap Investment's fault. However, a sourcing firm linked to the vehicle put money into the festival (a single-digit million Swiss franc sum, according to people familiar with the matter).

Cross Ties to Ruvercap

The sourcing firm, Finantia, developed out of a pawn-broker. Nearly two years ago, Ruvercap co-founder M.C. joined Finantia's board. Shortly afterwards, C. S., who later worked directly for Ruvercap, took the helm of Finantia.

In May of last year, shortly before the three-day festival was to take place in Biel, M.C. und C.S. left Finantia, which was subsequently renamed Vibez Entertainment. Ruvercap Chairman J.T. confirmed to finews.com: «Vibez was a client of Finantia.»

Strategy Known, Investments Opaque

Vibez invested «precisely as contractually agreed and in line with our investment strategy,» he said. Ruvercap's strategy was well-known to its investors, but the activities of sourcing firms – those which sniffed out debt opportunities for the funds – weren't.

It is doubtful that a pension fund would have knowingly looked for returns in a provincial music festival organized by novices in the live music and entertainment industry. Vibez represents a fraction of funds investors allege have gone missing. Ruvercap Investment disputes the 350 million t0 500 million franc sum that some investors suspect can be written off, saying actual losses are far lower.