Connaught Asset Management has told investors in one of its unregulated collective investment schemes that they will not get their latest interest payments on time and has temporarily suspended a second Ucis fund.
On March 7, Connaught, which is not regulated by the FSA, suspended one of its three Ucis funds, the income fund series one, while it commissioned a review into the true value of the fund. It has now contacted investors to tell them the fund is unable to pay their scheduled quarterly interest payments after bridging lender Tiuta, which is backed in part by the fund, told the asset manager it will be late paying its own interest payments.
Connaught says the review of the fund will be completed “very shortly”. It says it has a charge on every property in the fund and additional guarantee and debenture agreements.
Connaught says it has also temporarily suspended the income fund series two to “avoid any speculation and uncertainty”. It expects the fund to resume normal dealing by May 14. The income fund series one has about £120m of assets while the series two fund has about £18m. The income fund series three, which has £10m of assets, has not been affected.
Chairman Mike Davies was the compliance officer of Tiuta, which pulled out of regulated mortgage business in May last year, between August 2008 and July 2010. Davies says Connaught is taking steps during the suspension of the income fund series two to ensure this does not happen again.
Tiuta declined to comment.
AWD Chase de Vere head of communications Patrick Connolly says: “This is another example of the risks involved in investing in unregulated funds, where you have little comeback if things start to go wrong.”