CMA saves investment firm from jittery clients : The Standard

The Capital Markets Authority (CMA) has thrown Amana Capital a lifeline, restraining investors from withdrawing their funds from the asset management firm for the next one month. The move is expected to enable Amana mobilise funds to pay investors demanding their money back. Amana Capital plunged into difficulties after investing Sh275 million in Nakumatt’s commercial paper, which is among the debts that the troubled retailer defaulted on. CMA said yesterday it had granted Amana a 28-day period within which investors cannot withdraw funds invested.

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“In line with its investor protection mandate, the Capital Markets Authority has given a no-objection to a 28-day moratorium to enable the fund manager, Amana Capital Ltd (ACL), work with its Trustee to improve its liquidity position to meet redemption obligations to unit holders with investments in the Amana Shilling Fund,” said the regulator in a statement. “The moratorium will give ACL time to realise strategies to improve its liquidity position to meet redemptions. The authority has been engaging the board and management of ACL, the Trustee and the Custodian as they put together solutions to the liquidity challenges.” An extraordinary general meeting of the unit holders of the Amana Shilling Fund has been convened during the moratorium period, as required under the Trust Deed and Rules of the Amana Unit Trusts, said CMA.

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Amana Capital is among the 800 wealth management funds, insurance agencies and individuals who had advanced short-term debts to Nakumatt totalling to some Sh4 billion. Liquidate assets

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The investors were urged on by positive reviews of the retail sector and a particularly bullish Nakumatt that at its peak had more than 60 outlets across East Africa. In all, Nakumatt owed creditors including the commercial paper holders and suppliers Sh38 billion. In a January meeting, the creditors agreed to liquidate Nakumatt assets in a bid to recover their money. The challenge for liquidators, however, is that the retailer did not have much assets and once liquidated, employees, banks and the Kenya Revenue Authority will get preference. The commercial paper holders, who the court appointed administrator said will walk away with nothing, had lent the retailer money to fund its operations, which they expected to accrue interest, but ended up burning their fingers.

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Capital Markets AuthorityCMAAmana Capital