Sparx Widens Loss as Fees Decline Amid Global Market Slump

Sparx Group Co. (8739), Asia’s second- largest hedge fund, widened its full-year loss as performance and asset management fees dropped amid market declines on global economic concerns.

The asset manager reported a net loss of 4.54 billion yen ($57 million) in the 12 months ended March 31, compared with 3.7 billion yen a year earlier, the Tokyo-based company said in a statement through a stock exchange. Revenue fell 37 percent to 4.49 billion yen.

Sparx posted its second straight annual loss even after cutting employee compensation and relocating to less expensive offices in Tokyo. Assets under management dropped 20 percent to 535.4 billion yen during the year, the company said.

Asset management fees fell 21 percent to 3.8 billion yen, while performance-based fees slid 78 percent to 454 million yen, in part on declines from its Korean unit, the company said.

Sparx started an Asian long-short equity fund last fiscal year using $10 million of the company’s own cash as seed capital. It also began a fund that will invest in building hotels in areas damaged by the March earthquake and tsunami in Japan’s northeast.

Shares of Sparx fell 3.6 percent to 5,640 yen at the close of trading on the Jasdaq exchange in Tokyo before the earnings announcement. The stock has gained 5.2 percent this year, compared with the 6.7 percent gain by the Jasdaq index.

To contact the reporters on this story: Tomoko Yamazaki in Tokyo at tyamazaki@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net.

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