M&G ex­tends ban on with­drawals from flag­ship fund

M

The Punch - - INTERNATIO­NAL BUSINESS -

&g has ex­tended the ban on in­vestors with­draw­ing funds from its flag­ship £2.5bn prop­erty fund, one of the big­gest in the coun­try.

Ac­cord­ing to The Guardian, the com­pany shocked small in­vestors in De­cem­ber by sus­pend­ing its gi­ant prop­erty port­fo­lio fund in re­sponse to a surge in the num­bers of peo­ple pulling their cash out.

M&g is re­quired to re­view the sta­tus of the fund on a monthly ba­sis, and in an up­date on Thurs­day it said: “M&g is to con­tinue the tem­po­rary sus­pen­sion of deal­ing in the M&g prop­erty port­fo­lio and its feeder fund un­til fur­ther no­tice.”

This means in­vestors may have to wait months to see their cash again.

The fund spe­cialises in com­mer­cial prop­erty, and the fund man­agers have been sell­ing off as­sets such as re­tail parks and of­fices in or­der to re­build cash lev­els. They re­vealed they had raised £70m since the end of Novem­ber, with a fur­ther £67m of cash in the pipe­line.

The fund was sus­pended af­ter “un­usu­ally high and sus­tained out­flows” – de­mand from in­vestors for their money back – prompted by “Brexit-re­lated po­lit­i­cal un­cer­tainty” and the re­tail down­turn.

Nearly £1bn had been with­drawn by in­vestors in the space of a year. M&g ad­mit­ted it had been un­able to sell com­mer­cial prop­erty fast enough to fund the rush for the door by in­vestors, leav­ing it with no choice but to block fur­ther with­drawals.

The sus­pen­sion caused alarm among in­vestors as it came hard on the heels of the de­ba­cle at Neil Wood­ford’s in­vest­ment funds.

In its up­date, M&g said it had re­cently com­pleted the sale of Raven­side re­tail park in ed­mon­ton, north Lon­don, for £51.4m. That rep­re­sents only a small gain on the £48.2m it paid for the site in 2009.

It has also ex­changed con­tracts on an of­fice de­vel­op­ment in Kingston Road, Staines, Sur­rey, for £19m. Re­ports re­lat­ing to M&g’s pur­chase of this site in 2015 sug­gest this rep­re­sents a loss on the £20m-plus that the fund man­age­ment group paid at that time.

In the up­date, M&g said the de­ci­sion to con­tinue the sus­pen­sion had been taken “in the in­ter­ests of pro­tect­ing the fund’s in­vestors”.

It added: “The im­me­di­ate pri­or­ity is to raise cash lev­els in a con­trolled man­ner. The fund man­agers and as­so­ci­ated teams are work­ing hard to in­crease the fund’s cash po­si­tion … Once cash lev­els have been suf­fi­ciently re­stored, the fund’s au­tho­rised cor­po­rate di­rec­tor will re­open the fund for deal­ing.”

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