Connaught Asset Management has “temporarily” suspended its Connaught Income Fund Series 2.
This follows its decision in March to suspend applications into, and redemptions out of, the Connaught Income Fund Series 1.
Mike Davies, chairman of Connaught Asset Management, said: “We were recently advised by the Specialist Partner that the last quarterly interest payment would be delayed, resulting in the distribution to investors not being paid on time as expected. However, unlike many investments, the Fund does have direct security taken over every property with a current loan on behalf of the Fund, additional Guarantee and Debenture Agreements and, furthermore, additional direct security on unencumbered property with the full support of the Specialist Partner to further protect investor’s interests. To ensure that the appropriate next steps are taken the General Partner has already commissioned an independent review to specifically confirm the General Partner’s view with regard to the most suitable next steps for the Fund to ensure these agreements are used with the full co-operation with the Specialist Partner to ensure investors have their monies returned. This report will be completed very shortly.
“Also, to avoid any speculation and uncertainty it has also been decided to temporarily suspend the Connaught Income Fund Series 2. The loan books and monies for each fund are ring-fenced and the Specialist Partner has always paid the quarterly distributions on time and it is expected this will continue into the foreseeable future. This is seen as a very prudent decision to protect the interests of investors while it awaits the results of the independent report to confirm the fund model.
“Connaught Asset Management (Guernsey) Ltd and the Investment Manager are using this period to set up an additional process for provisioning up-front for future investor distribution payments and for quarterly independent reporting on the continuing robustness of the Fund models to ensure that going forward there is no doubt regarding the Fund’s ability to secure both the income and capital for investors.
“The Asset Manager anticipates that the report will confirm that the Specialist Partner can meet its obligations to investors. In particular the temporary suspension of Series 2 is intended to ensure all investors’ interests are protected while this report is being prepared to provide certainty in the future. The Manager expects the Fund to resume normal dealing by no later than the mid-month dealing day of 14th May.
“I would like to personally thank both IFAs and investors in general for the huge support we have received regarding this process and review period, and we will continue to work solely in the best interests of investors.
“I would also like to stress that this does not have any effect at all on any other Funds managed by Connaught.”