Cru has proposed that the funds have a monthly subscription date and three month redemption facility introduced which would allow up to 5 per cent of the fund to be taken out every three months, should redemptions exceed that then they will be pro-rata.
Maguire says Capita rejected the plan on the grounds the move may not be legal and he has written to the FSA managing director of retail markets John Pain today to ask why that is the case and whether the regulations can be reviewed.
A Capita spokeswoman says no decision has been made by the firm. She says: “CFM has not committed to take a particular course of action in relation to the Arch Cru funds. Nor has it refused to take any particular course of action. A review of the options available is underway for the purposes of assessing how best to optimise the position of investors.
“This review will, of necessity, need to take account of any legal or regulatory constraints on implementation of the possible options. Decisions will be made by CFM about how to proceed in light of the findings of that review, and it would not be appropriate for CFM to pre-empt the findings of that review. Safeguarding the interests of shareholders is clearly of paramount importance and we will ensure that investors are kept appropriately informed.”
Maguire says the funds will have to change structure because once the products re-open the flow of redemptions will mean that they will have to be closed immediately.
Under the new structure cru proposes Capita would set the NAV at the end of each month and that 5 per cent quota of the fund can be taken out at the end of June, September and so on every three months.
The funds will re-open on April 9, 2009 unless the FSA agrees to an extension.
He says: “We do not see a problem with a proposed restructure provided that all of the shareholders approve the decision. We are trying to be proactive on this but we are being met with a wall of silence.”
Since the funds were closed on March 13 due to liquidity, advisers have bombarded the firm with questions surrounding how these fund were valued and the links between cru and Africa Invest. Maguire and other Africa Invest directors are set to tour the UK in April and May to promote the launch of the firm’s Africa Agri fund.
Skerritt Consultants head of investments Andrew Merricks say: “It is the old adage that you do not put money in things that you do not understand. There is often a commonality with funds that get into trouble that they have a linear line that goes from bottom left to top right with few exceptions.
“If it does breach regulation then Capita has to look after themselves and ultimately it looks like an issue for cru and the FSA.”