New Star Asset Management suspended trading in its £470m International Property Fund on Tuesday after large redemptions from institutional investors.
Suspension of trading in the fund’s units caused shares in the fund manager – which a fortnight ago revealed it had renegotiated lending terms with banks to avoid breaching covenants – to drop 33% to just 16p. Shares in the company have dropped 93% in the past year.
It is thought that institutional investors have pulled around £75m out of the fund recently, leaving it with almost zero cash.
New Star said it did not know how long the suspension would last, but it is understood that an initial suspension period of 28 days has been agreed with the Financial Services Authority.
“It is with great reluctance that New Star has temporarily suspended dealing in the New Star International Property Fund,” Stuart Webster, the fund’s manager, said. “The fund has demonstrated that a portfolio such as this has valuable diversification benefits.”
Falling star
New Star shares fall 93%
