Investors cry foul as real estate firm Cytonn puts assets on sale

Cytonn Investments CEO Edwin Dande

Cytonn Investments CEO Edwin Dande addresses journalists at The Stanley Hotel in Nairobi on January 31, 2017.

Photo credit: File | Nation Media Group

A section of investors in the embattled Cytonn Investment Management have cried foul over plans by the company to sell off some of its assets, raising fears that they could lose their cash without any avenue for recourse.

The aggrieved investors put a caveat emptor (buyer be ware) notice in a newspaper advert on Saturday, in an apparent effort to block sale of assets they hope to use to recover money lost in two botched investment schemes under Cytonn.

The investors under the Cytonn High Yield Solutions LLP (CHYS) and Cytonn Real Estate Project Notes (CHN) have warned potential investors against buying nine assets under Cytonn, noting they are subject to administration orders that were issued last year.

“The assets listed in the schedule below are subject to the said Administration Orders having been acquired with proceeds from CHYS and CPN, and the investors in the two funds have a beneficial interest in the said properties,” the notice read in part.

Cytonn CEO Edwin Dande, however, downplayed the notices claiming they do not have any legal effect.

The investors have decried the plans by Cytonn to sell the properties in Nairobi, Machakos and Kiambu; claiming the company has no right to sell them without consent from some 4,000 investors who put money in the CHYS and CPN schemes.

“It has come to the attention of the investors in CHYS and CPN that CIMP has advertised and/or put up for sale by private treaty and/or conversions some of the said assets. Members of the public are cautioned that the said assets/properties cannot be dealt with, transferred, or disposed of without the consent of the creditors and the approval of the court and that they should take care not to fall victim of any advertisements made by Cytonn or any of its affiliated companies,” the notice said in part.

The two schemes, CHYS and CPN, were placed under administration after Cytonn filed for insolvency last year.

Investors claim that the administration orders are sufficient to bar the investment company from selling off its assets.

“Those assets were acquired using our money and the administrator has identified them as some of the assets that can be used to recover our money. Therefore, Cytonn cannot sell them off without our consent. The caveat is meant to preserve assets that the investors have interest in,” Mr John Matheka, an investor, said.

Mr Dande, however, denied knowledge of the caveat and threatened legal action against the investors.

“We are taking legal advice and we shall keep you updated,” Mr Dande said.

The one-year administration period on the two investment schemes comes to an end next week, much to the relief of the investors who are keen to recover their money.

The investors have expressed plans to push for receivership in an effort to recover billions worth of investment.

“The end of the administration period is a good thing because it now allows investors to commence legal action against Cytonn so that we can get our money back,” Ms Elizabeth Kaguamba, an investor, told the Nation.

Some of the investors are also pushing for forensic audit and criminal investigations into Cytonn, alleging the two botched investment plans were a Ponzi scheme.

“There should be an extensive forensic audit into Cytonn and we call on investigative bodies and authorities to take legal action,” Mr Stephen Kibuga said.

Mr Dande also said he is looking forward to end of the administration period, saying it will allow for the dispute to be resolved.

“We are looking forward to it coming to an end so that investors and the fund manager can continue the restructuring directly without engagement of a third party,” Mr Dande said.