Delisting and AGM announcement

RNS Number : 2804C

The Family Shariah Fund Ltd

30 April 2012

 



FOR IMMEDIATE RELEASE

30 April 2012

THE FAMILY SHARI'AH FUND LIMITED

(the Company)

(Incorporated and registered in the Cayman Islands with registered number SH-206066)

Proposed cancellation of admission to trading on AIM

and

Notice of Annual General Meeting

The Family Shari'ah Fund Limited today announces that it is proposing to cancel its admission to trading on the AIM market of the London Stock Exchange ("AIM"), (the "Cancellation"). The Company has today published and sent to all holders of Ordinary Shares (the "Shareholders") a circular setting out further details of the Cancellation and the implications of the Cancellation for Shareholders (the "Circular").  The Circular also contains a notice convening the annual general meeting of the Company which is to be held at the offices of The Family Office Company B.S.C. (Closed), Al-Zamil Tower, 9th Floor, Building 31, Government Avenue, Manama Center 305, PO Box 18024, Manama, Kingdom of Bahrain at 2 p.m. (Arabia Standard Time) on 22 May 2012 (the "Annual General Meeting"), at which the approval of Shareholders of the Cancellation will be sought. Conditional on the Cancellation becoming effective, Shareholders will also be asked to approve the adoption of new articles of association, and a change to the Company's investment policy.

The Shareholders will also be asked to approve other ordinary business as appropriate at an Annual General Meeting. In the event that Shareholders approve the Cancellation, it is anticipated that trading in the Ordinary Shares on AIM will cease at close of business on 30 May 2012 and the Cancellation will become effective at 7:00 a.m. (London Time) on 31 May 2012.

The Shareholders should note that Religare Capital Markets (Europe) Limited has given notice that it will cease to be the Company's nominated adviser with effect from 31 May 2012. As a result, if the Cancellation is not approved and a replacement nominated adviser is not appointed by such date, trading in the Company's shares on AIM will be suspended by the London Stock Exchange with effect from 31 May 2012. On appointment of a nominated adviser, the suspension on trading will be lifted and the Company's shares will continue to be traded on AIM. In such circumstances, the Board will continue to evaluate the Company's strategic options in consultation with its major Shareholders. However, Shareholders should be aware that, while its ordinary shares would continue to be admitted to trading on AIM, the Company would continue to incur costs associated with, inter alia, maintaining such a quotation. 

Further, Shareholders should note that if the Company fails to appoint a replacement nominated adviser within one month of its suspension of trading, its admission to trading on AIM will be cancelled by the London Stock Exchange in accordance with Rule 1 of the AIM Rules.

Set out below are extracts from or reference to the Chairman's letter contained in the Circular. Capitalised terms used in this announcement and not otherwise defined have the meanings given to them in the Circular. 

For further information and a copy of the Circular, please visit the Company's website, www.familyshariahfund.com, or contact:

The Family Shari'ah Fund Limited	Tel: [phone]
Peter Robinson, Non-executive Chairman
Abdulmohsin Al-Omran, Non-executive Director
The Family Office Company B.S.C. (Closed)	Tel: [phone]
Naji Nehme, Portfolio Manager
Matthew Hansen, Chief Legal Counsel
Religare Capital Markets (Europe) Limited	Tel: [phone]
Nominated Adviser
David Porter, Richard Thompson
Computershare Investor Services (Jersey) Limited	Tel: [phone]
Registrars
Queensway House, Hilgrove Street St Helier, Jersey JE1 1ES
Computershare Investor Services PLC	Tel: [phone]
Custodian for Depositary Interests
The Pavilions, Bridgwater Road Bristol BS13 8AE

Background to and reasons for the Cancellation

When the Company was launched in July 2008 the following investment objectives were set out in the Company's AIM Admission Document dated 25 June 2008 and were designed to provide Shareholders with:

(a)      consistent risk adjusted returns over a market cycle via an active and diversified asset allocation program;

(b)     liquidity through trading of the Company's shares on AIM;

(c)     a diversified pool of Shari'ah compliant assets; and

(d)     geographic diversification of investments, predominantly outside the Gulf Cooperation Council.

Since July 2008, the global economy and international financial markets have changed significantly. Most notably the collapse of Lehman Brothers in September 2008 meant that already difficult market conditions were exacerbated as investors were seized with the fear of the possibility of the collapse of the international banking system. This doomsday scenario was avoided but this did expose the risks of excessive indebtedness, particularly for governments and consumers in the USA and Europe. Whilst there has been some progress towards resuming global economic growth, there remain several significant impediments, not least continuing uncertainty of the prospects of generating future prosperity within the Eurozone and fiscal and trade imbalances elsewhere.

The progress of the Company towards achieving the performance objective set out above has been affected by these events.  In particular, financial markets saw a polarisation of returns where those assets considered safe were bid very high but consequently yielded much lower returns and risky assets were shunned.  The effects of this were seen, for example, in the yield on high grade short term US$ assets falling from 4 per cent to virtually zero while volatility in equity markets increased dramatically.  In the face of these events, the Investment Manager was very cautious about investing in volatile equity markets but this meant holding more short term assets whose yields were much reduced.

The continued volatility in global equity markets and very low yields on short term assets meant that a change in strategy was required if the longer term performance objective was to be achieved. It was always anticipated that participations in private equity and real estate transactions would be part of the Company's portfolio.  However, by 2010 the Investment Manager had determined that these assets could provide attractive risk adjusted returns and recommended that the fund be allowed to invest more than was initially anticipated and this was endorsed by the Board on 19 April 2010 and subsequently approved by the Shareholders at the annual general meeting held on 15 June 2010. The Investment Manager worked diligently to secure this type of asset such that by the end of 2011, the new limits on these illiquid assets were effectively reached.

However, whilst exposure to private equity and real estate may provide reasonable returns in future, the performance of the fund to date has also been affected by its cost base.  The expenses of the Company have been high in relation to its size, due primarily to amortising the set-up costs and the direct and indirect expenses of being listed on AIM. Every effort has been made to control costs, including the Investment Manager waiving all of the contracted management fee for the year 2011.

Nevertheless, despite all these efforts, the fact remains that at US$28.6 million, as at 31 December 2011, the net asset value of the Company is still some 9.2 per cent below the level of the initial subscriptions which amounted to US$31.5 million.

The second objective of the Company was to provide Shareholders with liquidity for their holdings by the listing of the Company's shares on AIM. However, since inception to date there has not been a single trade in the Company's shares.

The Board has been aware of these issues, having tracked the relevant data at regular Board meetings with presentations from the Investment Manager.  The intention, however, has always been to increase the size of the fund by attracting additional investors. This was anticipated to have the dual benefits of spreading the largely fixed cost base over a larger pool of assets, thereby improving the returns to investors and also, with a larger and hopefully more diverse shareholder base, that shares in the Company could then be actively traded.

However, the Board has been informed by the Investment Manager that despite significant marketing efforts over the past two years, there is no realistic prospect of attracting additional investors in the foreseeable future.  In the view of both the Investment Manager and the Board, this assessment means that a radical change in strategy is required.

All costs and expenses are being reviewed and reduced where possible including delisting of the Company's shares on AIM.

Financial strategy and business plan following Cancellation

The Investment Manager has made the following recommendations to the Board in relation to the financial strategy and business plan following Cancellation, which the Board has endorsed:

(a)      other than commitments relating to pre-existing uncalled capital, the Company will cease investing in any further assets;

(b)     all liquid assets held by the Company to be sold as soon as practicable after the approval by Shareholders of the proposals referred to in this circular and that, subject to retaining sufficient cash balances to cover at least the estimated costs and expenses and any uncalled capital commitments of the Company for the following 12 months, the remaining cash be returned to Shareholders as soon as practicable; and

(c)     the remaining assets of the Company to be monitored. All cash income and proceeds from redemptions in the normal course to be distributed to Shareholders as soon as practicable subject to retaining sufficient cash balances to cover at least the estimated costs and any uncalled capital commitments of the Company for the following 12 months.

Principal effects of the Cancellation

Following the Cancellation, there will be no market facility for dealing in the Ordinary Shares and no price will be publicly quoted for the Ordinary Shares. As such, holdings of Ordinary Shares are unlikely to be capable of sale and will be difficult to value. The Depositary Interest facility will be cancelled on 15 June 2012.

Although the Ordinary Shares will remain transferable, they will cease to be transferable through CREST. Those Shareholders who currently hold Ordinary Shares in uncertificated form as Depositary Interests will, following the Cancellation becoming effective, be sent a share certificate for those Ordinary Shares which were previously held in uncertificated form. Such share certificates will be dispatched on or after 18 June 2012. Depositary Interest holders can withdraw the Depositary Interests from CREST by submitting a CREST Stock Withdrawal. The Depositary Interest will be withdrawn and a share certificate will be issued.

Shareholders who wish to acquire or dispose of Ordinary Shares following the Cancellation may contact Naji Nehme or Matthew Hansen on [phone] or by post at The Family Office Company B.S.C. (Closed), Al-Zamil Tower, 9th Floor, Building 31, Government Avenue, Manama Center 305, PO Box 18024, Manama, Kingdom of Bahrain.

Further details of the effects of Cancellation are provided in the Circular.

 

END

 

 

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