The delay by the Central Bank of Nigerian (CBN) over deciding the direction of its currency has forced Danish group Sydinvest to suspend its Africa-focused fund, the group has announced.
According to agency reports, the Sydinvest Afrika fund, which is managed by Nicolaj Jeppesen, was formally closed to investors on June 4 amid concerns about the future of the naira.
Sydinvest said it had taken the decision to halt trading on the Denmark-domiciled fund as the Nigerian central bank would not set a date for allowing the currency to float freely against the US dollar.
The Nigerian stock market rose 25 per cent over the month of May as investors prepared for the change in the currency regime. However, Sydinvest expected a sharp correction after the date of the shift was finally confirmed as June 20.
In a note to shareholders, Sydinvest said it was forced to suspend the fund given it has 30 per cent exposure to Nigeria and was already under restrictions regarding the export of the Nigerian currency.
‘We cannot just sell the shares and reduce the investment in Nigerian stocks, hence the uncertainty,’ the group said. ‘We face incurring a big tail risk by selling the shares, as we anticipated the weakened naira will hit the proceeds of the sale.’
Sydinvest said it was therefore difficult to determine the real asset value of the fund and it opted to close it until further clarity could be achieved.
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