Federated Hermes Subsidiary Sued for $120M Over Infrastructure Fund Investment

summarizeSummary

Federated Hermes disclosed a lawsuit against its subsidiary and a general partner in the UK, seeking approximately $120 million for alleged negligence related to an infrastructure fund investment.

check_boxKey Events

• Legal Proceedings Initiated

  Hermes GPE LLP, a wholly-owned subsidiary of Federated Hermes, and Hermes Infrastructure II GP LLP have acknowledged service of 'Particulars of Claim' in the High Court of Justice in England and Wales. The lawsuit was filed by Aberdeen City Council Pension Fund.

• Allegations of Negligence and Breach

  The plaintiff is asserting derivative claims against Hermes GPE LLP for professional negligence and breach of contract related to a 2019 investment of approximately £104 million in a portfolio of five onshore wind farms in Sweden, which has since declined in value.

• Significant Damages Sought

  The derivative claim seeks approximately £87 million (or $120 million) for the alleged diminished value of the Ventus Portfolio. Additionally, direct claims against the General Partner seek approximately $46 million.

• Company Denies Allegations

  Federated Hermes, Hermes GPE, and the General Partner deny the plaintiff's allegations, believe the claims are without merit, and intend to vigorously defend against them. The company does not believe the outcome will have a material adverse effect on its financial position and has filed a claim with its insurers.

auto_awesomeAnalysis

Federated Hermes' wholly-owned subsidiary, Hermes GPE LLP, and Hermes Infrastructure II GP LLP are facing a lawsuit in the UK High Court seeking approximately $120 million in damages. The claim alleges professional negligence and breach of contract related to a 2019 investment in a Swedish wind farm portfolio that declined in value. While the company denies the allegations and intends to vigorously defend itself, and has filed a claim with its insurers, the potential liability represents a notable portion of the company's market capitalization. Investors should monitor the progress of this litigation as it could impact future financial results.