Capital Markets

Eyes on Amana as customer funds shrink 85 percent

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Investors during a briefing. Amana now has a market share of 0.23 percent. PHOTO | DIANA NGILA | NMG

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Summary

  • Amana Unit Trust fund’s assets under management shrunk by 65.9 percent to Sh203 million in the three months to June, piling pressure on the collective investment scheme that started in 2010.
  • Latest industry data published by the Capital Markets Authority (CMA) shows that the funds under management at the end of June dropped from Sh597 million in March, marking the tenth straight trading quarter of shrinking assets.
  • The latest decline means that Amana Unit trust, owned by Amana Capital, has shed Sh1.18 billion in funds under management in two-and-half-years.

Amana Unit Trust fund’s assets under management shrunk by 65.9 percent to Sh203 million in the three months to June, piling pressure on the collective investment scheme that started in 2010.

Latest industry data published by the Capital Markets Authority (CMA) shows that the funds under management at the end of June dropped from Sh597 million in March, marking the tenth straight trading quarter of shrinking assets.

The latest decline means that Amana Unit trust, owned by Amana Capital, has shed Sh1.18 billion in funds under management in two-and-half-years.

Amana was managing Sh1.38 billion at the start of 2018, meaning that the funds have now shrunk by 85.3 percent in two and half years.

The shrinkage came on the back of Amana Capital running into loggerheads with investors for freezing access to funds after suffering debt exposure in the collapsed retailer Nakumatt Holdings.

Amana gated its funds after investing Sh275 million in Nakumatt’s commercial paper, an amount that represented 20 percent of its assets.

Nakumatt defaulted on the commercial paper holders among other classes of creditors, sparking major write-offs among banks, suppliers, insurance firms and high-net-worth individuals.

Commercial papers are short-term debt instruments issued by companies to finance their working capital.

They typically offer higher rates of return compared to bank deposits and Treasury bills but they are unsecured and come with little financial disclosures.

CMA data shows that Amana now has a market share of 0.23 percent, only beating Alpha Africa and Wanafunzi Investments in the industry that has 19 players.

Meanwhile, the relatively new Co-op unit trust saw its funds under management grow from Sh10 million in March to Sh1.5 billion in June.

Co-op Trust which joined the segment in the second quarter of last year has been the fastest growing unit trust in recent times in a market that has grown assets by 15 percent from Sh76.5 billion in March to Sh88 billion in June.