NAIROBI, Kenya, June 19 – American asset manager BlackRock has announced the liquidation of its emerging market (EM) funds in Kenya and Nigeria.
The decision follows ongoing liquidity challenges in several frontier markets, which have been exacerbated by delays in the repatriation of funds in dollars.
Its board concluded that liquidating the fund is in the best interest of both the fund and its shareholders.
One of the significant factors impacting the liquidation process is the conversion of local currencies, including Nigeria’s Naira.
As a result, the liquidation will be extended over a longer period.
BlackRock says that the majority of the fund’s assets will be held in cash and cash equivalents throughout the liquidation period.
”During the extended liquidation period, the Fund will not be managed in accordance with its investment objective and policies, as the Fund will sell down its assets, as determined by BlackRock Fund Advisors, where possible and hold the proceeds of such sales in cash and cash equivalents,” it said in a statement.
“It is expected that the Fund will hold a substantial majority of its assets in cash and cash equivalents during the extended liquidation period,” added Blackrock.
This shift in asset allocation means the Fund will not maintain its typical policy of holding at least 80 percent of its net assets in equity securities tied to frontier and emerging markets.
Instead, it will hold substantial cash and equivalents, potentially affecting the fund’s performance during this period.
The declaration might be a serious setback to Nairobi’s attempts to establish itself as the financial and investment capital of East Africa.
The iShares Frontier and Select EM ETF, a vehicle that focuses on developing and frontier economies, is also being shut down by BlackRock.
Earlier, Central Bank of Kenya Governor Kamau Thugge stated that he held a meeting with firm executives after they had chosen Kenya as one of the ten economies in which to invest, noting, among other things, the company’s interest in reforming the foreign exchange market.
After a period of three months, BlackRock is anticipated to conclude the process of selling its investments in frontier and emerging countries on August 12.
