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Home > Investments > Fixed Income

Suspended Connaught Ucis to be liquidated following vote

“Overwhelming vote” from investors to place income fund in liquidation, following its suspension in March.

By Donia O'Loughlin | Published Sep 14, 2012 | comments

Investors in the Connaught Income Fund Series 1 have voted to place the fund in ‘formal’ liquidation with Duff & Phelps Ltd being approved as the liquidator, the company has confirmed.

At a meeting held on 12 September 2012, there was an “overwhelming” vote to place the fund in liquidation, Connaught said.

In March, Connaught’s Income Fund Series 1 was suspended to new inflows and investment redemptions, after the investment manager discovered that assets used to secure loans in the fund may no longer provide sufficient collateral.

The vehicle, which is an unregulated collective investment scheme, hands capital to a partner firm called Tiuta, which then offers it out as short-term and bridging loans, which are secured against property. The loans are offered at a target loan-to-value rate of 75 per cent.

In May 2011, the FSA warned investors in Connaught’s Series 1 and 2 funds to speak to their financial advisers as while the funds were advertised as low risk and this “could be misleading to investors”.

In June, short-term loan lender Tiuta revealed that Connaught Asset Management had taken over the loan books made through Connaught’s series one and series two Income funds, both of which were being wound down, following an internal restructure of the business.

At the time of the suspension Mike Davies, chairman of Connaught Asset Management, said the move had been taken following a review of the value of assets used as collateral to the loans.

The chairman said the review will take “a further four weeks to complete” after which he said the company would contact its investors.

Mr Davies said: “We have worked closely with Duff & Phelps for some months, having appointed them as the independent adviser to the fund in suspension, and we will continue to willingly co-operate with them in their appointment in realising the clear wishes of the investors and in maximising the recovery of their capital.”

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