Barak Fund Management Limited – a Mauritius registered entity that is the investment manager of Barak Funds SPC Limited – says that it notes recent media speculation regarding the liquidity of the Company, and wishes to clarify some key points in this regard.
Earlier this week, Bloomberg reported that Barak Fund Management’s $1 billion money pool is “preparing to sell its frozen assets in the latest case of implosion at a provider of trade finance.”
Barak states that it is “not imploding” and remains fully operational and is servicing its clients.
The Company also continues to operate and is servicing borrowers across the African continent, Barak adds.
“The Fund’s investments consist predominantly of loans to African businesses and as a result of the COVID-19 pandemic and lockdowns, some of those businesses have cashflow issues.
“Given that the Funds have limited cash available to pay and with it being more difficult to accurately value the restricted liquidity assets, the Fund’s independent board decided to suspend redemptions from the Funds and subscriptions into the Funds until such time as some sense of normalcy had been restored. This step was taken to protect all of the investors.”
Barak states this it is not an unusual step for an investment fund to take in extraordinary circumstances such as these “and investors are specifically made aware that such steps may be implemented when they sign the subscription forms for the Funds.”
While the suspensions are in place, Barak says the Funds are operational with borrowers being serviced, fully functional credit reviews and active accounting taking place.
“The suspension simply means that we cannot accept inflows or outflows in fairness to all our investors.”
Since implementing the suspension, Barak and the Company have been working on a plan to lift the suspensions.
“In essence, Barak has focussed on identifying those investments that are prone to restricted liquidity and separating those out from the unaffected investments. Barak has worked with the Company’s lawyers and has a clear plan to deliver a restructuring, which will allow those investors who wish to do so to exit, and those wishing to continue to remain invested in the Funds’ strategies. The restructuring plan requires investor approval, and a detailed letter explaining the plan was sent to investors on 2 February 2021.”
Barak states that a high percentage of the investors in the Funds have already indicated that they support the restructuring and will remain invested in the Funds. The company is confident that the restructuring will be approved during the scheduled general meeting.
“Barak has been keeping investors apprised of the situation throughout the suspension period and has full confidence in its ability to address the current status of the Funds as well as its ability to provide transparent updates to all investors in the current environment.”
The company believes that media reports also created the erroneous impression that the Company and Barak are associated with Greensill, the British financial services firm that is insolvent.
“Neither Barak, nor the Company nor any of the Funds is in any way associated with Greensill, nor is the business model linked to the Greensill business model.”
The auditors of the Funds “are working towards completing the Annual Financial Statements”.
The auditors have released the 2019 audited annual financial statements for the Barak Shanta Fund, the Barak Impact Fund and the Barak Asha Fund and are working towards completion of the annual financial statements for the Barak Africa Trade Finance Fund, the Barak Sharia Fund and the Barak Structured Trade Finance Fund.
“We have also agreed with the auditors to perform a rollover and continue with the completion of the December 2020 year-end audit immediately on sign-off of the 2019 audit in order to avoid any further delays,” the company states.
Barak CEO Jean Craven says: “We have taken firm steps to protect our investors by implementing a temporary suspension of trading in the Fund. This has given us valuable time to find a lasting solution to the liquidityconstraints some of our investments are experiencing. We are focussed on implementing thissolution. We remain confident that the private credit asset class remains a strong indicatorfor growth and opportunities in the Emerging Market environment, and look forward toproviding further updates on the progress of our restructuring.”