Dy­namic Wealth prop­erty in­vestors given tough choice

Weekend Argus (Saturday Edition) - - PERSONAL FINANCE - BRUCE CAMERON

Em­bat­tled Pre­to­ria-based fi­nan­cial ser­vices com­pany Dy­namic Wealth, which is sub­ject to a Fi­nan­cial Ser­vices Board (FSB) court ap­pli­ca­tion for cu­ra­tor­ship, is giv­ing in­vestors in an un­listed prop­erty in­vest­ment com­pany, Spe­cial­ist In­come Ltd, the choice of cash­ing in as­sets at a loss or stick­ing it out un­til prop­erty mar­kets come right.

The com­pany it­self, which started off life as a Dy­namic Wealth-spon­sored in­vest­ment club, is also sub­ject to the FSB’s cu­ra­tor­ship ap­pli­ca­tion.

Spe­cial­ist In­come has run into trou­ble be­cause of the prop­erty mar­ket col­lapse and con­se­quent tight­en­ing by banks on loans to prop­erty de­vel­op­ers, says Chris­ti­aan Jor­daan, Dy­namic Wealth’s head of com­pli­ance and risk.

Also sub­ject to the ap­pli­ca­tion are Dy­namic Wealth man­age­ment, Dy­namic Wealth Stock­bro­kers and the Bridg­ing Fac­tory.

Dy­namic also has a prob­lem with an in­vest­ment club money mar­ket port­fo­lio, which has been caught up in the col­lapse of Cor­po­rate Money Man­agers (CMM), which mas­quer­aded as a unit trust money mar­ket fund but which, in fact, pooled in­vestors’ money to in­vest in prop­erty de­vel­op­ments.

Dy­namic was the biggest loser in the R230-mil­lion po­ten­tial loss, but oth­ers, such as Mo­men­tum, were also caught short.

The in­vestor clubs are one of the main rea­sons for the FSB cu­ra­tor­ship ap­pli­ca­tion. The FSB claims that the clubs are pooled in­vest­ments that con­tra­vene the Col­lec­tive In­vest­ment Schemes Con­trol Act (Cisca).

The money mar­ket in­vestor club mem­bers and the In­come Spe­cial­ist share­hold­ers are mostly pen­sion­ers who in­vested in the Dy­namic prod­ucts for a monthly in­come, but they have re­ceived lit­tle or no in­come for at least 12 months. They have also not had ac­cess to their cap­i­tal.

Spe­cial­ist In­come share­hold­ers are to be asked to vote on spe­cial res­o­lu­tions at the AGM of the com­pany on June 24, which will de­ter­mine the fate of the com­pany and their in­vest­ments.

The share­hold­ers are be­ing asked to vote ei­ther for a res­o­lu­tion that will al­low for some as­sets to be re­alised and used to de­velop un­de­vel­oped prop­erty over the next four or five years, or for an al­ter­na­tive res­o­lu­tion to sell all as­sets, at a loss, and dis­trib­ute the pro­ceeds to the share­hold­ers.

The di­rec­tors, most of whom are elected by share­hold­ers, are also seek­ing the right to set val­u­a­tions of the com­pany’s as­sets at their dis­cre­tion, that would not ex­ceed the fire­sale value, to pay back cap­i­tal to in­vestors, who are suf­fer­ing from fi­nan­cial hard­ship.

Jor­daan says that by choos­ing to keep Spe­cial­ist In­come go­ing, in­vestors should make sound prof­its when banks loosen up on credit, al­low­ing de­vel­op­ments to go ahead, and when prop­erty de­mand and prices im­prove.

Jor­daan says that the AGM must be held in terms of the Com­pa­nies Act, de­spite the FSB’s cu­ra­tor­ship ap­pli­ca­tion.

Gerry An­der­son, the FSB deputy ex­ec­u­tive in charge of mar­ket con­duct, says as Spe­cial­ist In­come Ltd is now a pri­vate com­pany and the mat­ter is sub ju­dice, the FSB will not be in­ter­ven­ing in the sched­uled an­nual meet­ing.

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