By ADRIAN LOWCOCK 11/02/2009
Another day barely passes before there is a further announcement regarding a fund management group, today it is New Star. Whilst in the background the merger story continues, New Star have announced they are to close their Heart of Africa fund, two months after they suspended trading in it.
Suspension
This fund had concentrated investments in Ghana and Nigeria (21% and 30% respectively). Political uncertainty in Ghana resulted in light trading on their stock market, making it very difficult to sell existing holdings. In addition Nigeria placed foreign exchange restrictions adding to delays in returning cash to investors in the UK. Therefore the fund manager, Jamie Allsopp, has been looking into ways of raising cash in the portfolio whilst executing his obligation to get a fair price for the investments.
Closure
These issues surrounding the suspension of the fund have been resolved; however, turnover in shares in the sub-Saharan African markets has not recovered due to the knock on effects of the credit crunch. Due to the lack of liquidity and outflows New Star decide it would be fairer on remaining investors to close the fund. Those who had wished to stay invested would have suffered from a residual portfolio in highly illiquid stocks and little prospects of new monies coming in. Therefore the Liquidators and New Star have agreed to seek a wind up of the fund.
Refunds
The wind up is subject to formal approval with an effective date of the 31st March 2009. Conditional on the successful disposal of the assets, New Star plan to distribute the proceeds shortly after this date. As part of the wind-up there will no longer be a published indicative price.
New Star International Property
This fund is wholly unaffected by the events of the New Star Heart of Africa fund. It invests in a different asset class and whilst dealing remains temporarily suspended the manager remains confident of restoring liquidity and therefore able to re-open.