FILE | PHOTO Cytonn Investments Chief Executive Officer Edwin Dande At the heart of the contention is the capping of proceeds from the investment firm’s Cytonn High Yield Fund (CHYF) which are largely invested in-house through the Cytonn Asset Managers Limited.
Edwin Dande is hoping for a favourable ruling allowing his company Cytonn the leeway to invest more than 25 per cent of funds from the CHYF into a single real estate issuer.
CMA is meanwhile seeking to restrain Cytonn from operating outside the CIS Regulations as it warns of concentration risks including the loss of funds by the investing public.
Cytonn Investment Chief Executive Officer Edwin Dande is putting up a spirited fight with the Capital Markets Authority (CMA) over the deployment of proceeds from its high yield fund.
At the heart of the contention is the capping of proceeds from the investment firm’s Cytonn High Yield Fund (CHYF) which are largely invested in-house through the Cytonn Asset Managers Limited.
According to the CMA, Cytonn should limit its in house investments to no more than 25 per cent after granting the fund exemptions to the Capital Markets (Collective Investment Schemes) regulations of 2001 through a letter issued on August 17.
On the contrary, Cytonn argues the regulations do not apply in its case under Regulation 16 (2) as the funds trustee-the National Bank of Kenya (NBK) and custodian SBM Bank Kenya are not related companies.
Cytonn Investments created the high yield fund in December last year with the aim of raising Ksh.30 billion from high net worth investors and got the requisite approval to do so by the CMA.
On February 20 this year, Cytonn wrote to the CMA requesting for exemptions on Regulation 78 (2) (c) of the Collective Investment Schemes (CIS) regulations which restricted investments into a single issuer to no more than 25 per cent.
On June 3, CMA indicated the waiver could not be progressed and later gave Cytonn six months to remedy its investment portfolio effective from August 17.
In its argument, the regulator says the refusal of the exemptions were geared at safeguarding investor interests should an adverse eventuality confront Cytonn Investment Management PLC and its other related entities. Malice? Cytonn CEO Edwin Dande has however argued of the ruling’s maliciousness while indicating the trust deed and incorporation documents establishing the high yield fund had provisions allowing more than 25 per cent of proceeds to be invested in a […]
