Ghana’s Gold Coast Moves to Shield Mutual Funds Amid Cash Crunch

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(Bloomberg) -- A Ghana money manager is splitting its mutual-fund business from investments tied up in a structured-finance fund that is being shut down amid a cash crunch in the industry.

BlackShield Capital Management Ltd., formerly known as Gold Coast Fund Management Ltd., is seeking to protect unit-trust investors by shifting the assets and liabilities in the structured-finance fund to a special purpose vehicle, the Accra-based firm said in a statement on Tuesday. The aim is “to ensure the seamless management of other funds and products, such as Gold Fund Unit Trust.”

The structured-finance fund, which manages about 3 billion cedis ($546 million) on behalf of 68,000 customers, is struggling to convert illiquid assets to cash to meet client withdrawals. Fund managers in the country became unintended casualties of a regulatory cleanup in the banking industry that started in 2017. That process shut down a third of the country’s banks, and resulted in the liquidation of 23 second-tier lenders, drying up liquidity across the financial-services sector.

As withdrawal demands piled up, some funds were also battling to convert investments in hard-to-exit assets, such as related-party deals, direct private-equity stakes or loans. The special purpose vehicle, created by shareholders of BlackShield, has already started pursuing state agencies and private businesses to retrieve funds, preparing litigation and putting in place measures to draw funds locked up with other financial institutions, the company said.

Read more about Ghana’s plans to bail out its second-tier lenders

Gold Coast was the West African nation’s largest money manager in 2016 but dropped out of the top 10 the next year after its assets were devalued due to a lack of liquidity.

The company’s Gold Fund Unit Trust has 25 million cedis in assets, Benjamin Afreh, a spokesman for BlackShield, said in an emailed response to questions. The collective scheme invests 75% of its assets in equities of Ghanaian companies and the rest in short-term instruments, according to its website.

©2019 Bloomberg L.P.

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