GCP Sovereign Infrastructure : GULF – future of the fund

GCP Sovereign Infrastructure has released a statement to update shareholders on the difficulty of investing its IPO proceeds. They say that

“Whilst the Company has reached substantive agreement with Borrowers in relation to transactions in a total size of c$100m, the due diligence process has highlighted risks which GCP believes would take such transactions outside of the scope of the Company’s stated investment policy and which may impact its ability to deliver its stated dividend target over the long term. Accordingly the Board, as advised by GCP, believes that there is considerable uncertainty as to these, or any, transactions being completed by the Company in the foreseeable future. As at the date of this announcement, the assets of the Company are wholly held in cash on deposit with maturities of not more than one month.  The Board is undertaking a strategic review of its options, which include a winding up of the Company, and will through the Investment Adviser be consulting with shareholders over the coming days. A further announcement will be made in due course.”

This is bad news for shareholders who are missing out on the income promised at the time of the flotation of the company and have suffered the expenses of the issue of the fund – we’ll keep you up to date with further developments.