Pipeline Project

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Disclaimer

Barak Fund Management will not be liable for any special, indirect, incidental, consequential or punitive damages or any damages whatsoever, whether in an action of contract, statute, delict (including, without limitation, negligence) or otherwise that relate to the use of this website. All information contained in this website pertaining to products and services and their terms and conditions, is subject to change without notice.

Although care has been taken as to what is contained in this website, no attempt has been made to give definitive or exhaustive statements of law or any opinions on specific legal issues and no representation is made or warranty given that the information is complete or accurate. This website does not constitute or offer legal or other advice and you should not rely on it as such advice.

Past performance is no guarantee of future returns and the fact sheets provided are for illustrative purposes only. The value of investments and income that are dependent on the performance of underlying assets or other variable market factors may vary from time to time. Investors must take cognisance of the fact that all the information provided are of historic nature.

Use of the website is entirely at the users own risk. Anyone requiring advice on any of the matters referred to herein should consult lawyers or other professionals familiar with the appropriate jurisdiction and legislation.

This Site contains information from Barak Fund Management and about the investment Funds it advisers. The information contained herein does not constitute a distribution, an offer to sell or the solicitation of an offer to buy. The distribution of information contained on this Site and the sale of shares in the Funds may be subject to legal or regulatory restrictions in certain countries in which users are resident or of which they are citizens.

This Site and its contents are being made available for the convenience of the present Investors of the Funds and such other persons expressly authorized by Barak Fund Management (“Authorized Persons”) for information purposes only, provided such Investors and Authorized Persons are not prohibited by any applicable law of any jurisdiction from receiving such information. Persons accessing this Site are therefore required to inform themselves about and observe such restrictions.

Barak Fund is an authorised financial services provider.

Disclaimer

Barak Fund Management will not be liable for any special, indirect, incidental, consequential or punitive damages or any damages whatsoever, whether in an action of contract, statute, delict (including, without limitation, negligence) or otherwise that relate to the use of this website. All information contained in this website pertaining to products and services and their terms and conditions, is subject to change without notice.

Although care has been taken as to what is contained in this website, no attempt has been made to give definitive or exhaustive statements of law or any opinions on specific legal issues and no representation is made or warranty given that the information is complete or accurate. This website does not constitute or offer legal or other advice and you should not rely on it as such advice.

Past performance is no guarantee of future returns and the fact sheets provided are for illustrative purposes only. The value of investments and income that are dependent on the performance of underlying assets or other variable market factors may vary from time to time. Investors must take cognisance of the fact that all the information provided are of historic nature.

Use of the website is entirely at the users own risk. Anyone requiring advice on any of the matters referred to herein should consult lawyers or other professionals familiar with the appropriate jurisdiction and legislation.

This Site contains information from Barak Fund Management and about the investment Funds it advisers. The information contained herein does not constitute a distribution, an offer to sell or the solicitation of an offer to buy. The distribution of information contained on this Site and the sale of shares in the Funds may be subject to legal or regulatory restrictions in certain countries in which users are resident or of which they are citizens.

This Site and its contents are being made available for the convenience of the present Investors of the Funds and such other persons expressly authorized by Barak Fund Management (“Authorized Persons”) for information purposes only, provided such Investors and Authorized Persons are not prohibited by any applicable law of any jurisdiction from receiving such information. Persons accessing this Site are therefore required to inform themselves about and observe such restrictions.

Barak Fund is an authorised financial services provider.

Data Room

To access detailed information regarding our funds simply provide your details below, specify your interests and our team will contact you.

01

FAQ's

  • FAQ Definitions

    1. New SPC means Barak Private Credit SPC.

    2. Existing SPC means Barak Fund SPC Limited.

    3. New Fund means the E.M. High Yield Fund SP.

    4. Existing Funds means each of Barak Structured Trade Finance Segregated Portfolio and Barak Impact Fund Segregated Portfolio

    5. Investment Manager –Barak Fund Management Limited for Existing Funds or Barak EU Fund Management Limited for the New Fund

    6. Founder Shares means the shares that are transferred from the Existing Funds to the New Fund

    7. Hurdle Rate means SOFR Secured Overnight Financing Rate USD

  • Why has it taken so long to implement an effective strategy?

    The initial COVID-19 pandemic and resulting lockdowns (and implications on trade and logistics) caused our borrowers both direct and indirect inability to service their debt obligations. The Investment Manager was hopeful that these constraints would pass over time and the Existing Funds could return to normal operation; however, with continued lockdowns as a result of various waves of the pandemic and other logistical impacts of same, it became clear that an alternative strategy was required to move forward.  With the large liquidity mismatch between redemptions and borrower repayments, the board of directors determined that the current strategy was no longer achievable. As such, a decision was eventually made that the Existing Funds shall be wound down in an orderly controlled way to maximise and preserve shareholder value.

  • What is the current standing with Regulators?

    The Existing SPC and Existing Funds are in good standing.

  • Why is the New Fund offering being offered to shareholders of the Existing Funds?

    By creating a continuation fund, we are affording our shareholders who still believe in the private credit space of Africa and the Middle East the opportunity to be part of the next iteration of Barak products. The original product, which is unsuitable for current conditions, was very successful and produced 236 % return from inception. The new product will seek to emulate that success but with a much more suited product base.

  • Why is the New Fund offering different to those of the Existing Funds?

    There are two main differences between the Existing Funds products and the New Fund.  
    Firstly, a hard lock-up period will cater to a more stable capital pool to match underlying portfolio liquidity and optimise diversification.  
    Secondly, regarding the redemption terms, these will be based on the liquidity of the portfolio. The New Fund will align the shareholders' redemption to that of the underlying portfolio and assets that the investor invested in at the time. The core principle here is matching our liquidity profile between borrowers and shareholders.

  • How does the new product protect shareholders against any future pandemic?

    As noted during 2020, the biggest problem faced for small and medium enterprises in Africa during the pandemic was the ability to trade with hard lockdowns and restrictions in the relevant countries. These enterprises faced a constraint of reduced free cash flow to service debt obligations; therefore, to mitigate the risk of forcing collateral positions to cash to service immediate redemptions of shareholders, the New Fund aims to lock the initial capital and allow for an orderly exit over the position during the lock-up period. This will cater for an effective transition of paying redeeming shareholders and reducing borrower positions.

  • What are the fees and other major commercial terms of the New Fund?

    E. M. High Yield Fund

    • Founder Share Class – No Fees

    • New Share Class EMH1

    Management Fees: 1.25 per cent per annum of the Net Asset Value (excluding the Founder Shares as defined in the Offering Memorandum) 


    Performance Fees: equal to the Relevant Percentage (15%) of the appreciation in the Net Asset Value per Share of the relevant Class during that Calculation Period above the High-Water Mark over the Hurdle Rate. 


    High Water Mark: the greater of the Net Asset Value per Share of the relevant Class at the time of issue of that Participating Share, and the highest Net Asset Value per Share of the relevant Class in respect of which a Performance Fee (other than a Performance Fee Redemption) has been charged at the end of any previous Calculation Period (if any) during which such Participating Share was in issue. 

    Redemptions: on each Redemption Day (1st Business day of each quarter) falling after the expiry of the Lock-up Period (2 years from issue). 

     

  • What is the yield forecast for all Funds (New and Existing Funds)

    Existing Funds = 

    Estimated Best Case Annualized Yield:  + 2% 
    Estimated Best Medium Case Annualized Yield:  0% Estimated Worst-Case Annualized Yield: -5 - 10%  

    New Fund = 

    E.M. Credit High Yield Fund
    Estimated Best Case Annualized Yield:  + 7% to + 10% Estimated Best Medium Case Annualized Yield: 3% to 7% Estimated Worst Case Annualized Yield: Flat/0% 

  • Who are the existing directors in the Existing SPC that shall provide control and oversight in the wind-down of the Existing Funds?

    • Michael Pearson:

    Michael is a highly experienced independent director, liquidator, trustee, and advisor. He specialises in providing independent governance and dispute resolution advice to companies, partnerships, trusts, and other financial structures. He currently acts as a director and liquidator to several hedge funds and other investment holding company boards, both offshore and onshore. 

    • Mitchell Alan Barrett:

    Mitchell is an S.A. qualified attorney. He has more than 20 years of experience in the financial services sector. He worked at leading corporate services companies, including Maitland's, Intercontinental Trust (Baker Tilly Group), and was a partner in Turnstone Corporate. In 2009 he was appointed as CEO of a large family office holding numerous interests in diverse sectors around the world. He also assisted a middle east sovereign fund with more than USD1B worth of mergers and acquisitions in the hospitality sector. He presently sits on the boards of several investment funds and is the managing partner of Barrett d'Avray Inc. He holds an MBA, and diplomas in International Tax and Wealth Management.  

  • Who are the new directors of the New SPC?

    The signing on of the new directors is currently underway. 

    • Glen Wigney:

    Glen was formerly a senior member of Deloitte & Touche's global financial services team and had 30 years of experience with the Canadian, Cayman Islands, and U.S. member firms of Deloitte Touche Tohmatsu. A respected alternative investment industry professional with the U.S. and global expertise, Glen is a results-oriented strategic leader who has successfully managed all aspects of a professional services firm. 
    While effectively serving a portfolio of investment management audit clients, he liaised closely with non-attest services to fully serve clients. 

    • Richard Lewis:

    Richard Lewis has extensive experience in his capacity as trustee, director, receiver, and liquidator providing governance to a variety of offshore structures that have found themselves in contentious circumstances with active litigation, stakeholder dispute, or regulatory investigation. 
    With over 12 years of experience in financial services, Richard is regularly involved in managing litigation and illiquid assets, resolving valuation and investor disputes, and asset recovery and investigations regarding fraud, regulatory and white-collar issues.

    • Evan Feldman:

    Evan is a founding shareholder of Barak Funds. Evan has led teams within Barak in various capacities and sits on Barak’s Executive Committee. Evan Feldman has extensive experience in his capacity as a director, stakeholder and governor. With over 25 years of experience in financial services, Evan has deep experience in fund advisory, licensing and fund regulation.  Evan was born in Zimbabwe, lived in South Africa and currently resides in the United Kingdom acting as COO of Barak UK Limited. Evan holds a Bachelor of Commerce degree from The University of Cape Town, where he majored in Accounting and Economics. Evan is a registered director under the Directors Registration and Licensing Law, 2014 of the Cayman Islands. Evan is also a registered member of the JSE Securities Exchange South Africa, where he has been a member since 1996.

  • Who will comprise the Investment Committee of the New Fund and Existing Funds?

    Funds?
    There will be two investment committees, one appointed by Barak Fund Management Limited in respect of the Existing Funds, and the other appointed by Barak EU Fund Management Limited in respect of the New Fund.  As part of their mandate, each investment committee will approve every investment deal entered into by their respective fund (as is currently the case for the Existing Funds).


    New Fund
    The Investment Manager intends to appoint Craig Lyons (independent member) and Ian Henderson (independent member), who up until now both sat on the investment committee for the Existing Funds. As the New Fund grows so more resources will be allocated to this I.C.  


    Existing Funds 
    The current intention is that the investment committee will have two independent members and three internal members. The balance of the committee will be Johan Van Rensberg (existing independent member), Prieur Du Plessis (CIO / existing internal member), Jean Craven (CEO / existing internal member), Matthew Robinson (Deputy CIO), and one new independent specialist member to be appointed.  
    The assets of the Existing Funds that are indirectly attributable to the Founder Shares will still be managed by Barak Fund Management Limited and the investment committee appointed by it regarding the Existing Funds.

  • Will a New Investment Manager be appointed to manage the New Fund? If so, what is the composition of the New Investment Manager?

    Yes, a new Investment Manager will be appointed for the New Fund. This will be Barak EU Fund Management Limited.  Barak EU Fund Management Limited and Barak Fund Management Limited share the same principals. Their respective personnel may collaborate closely and share resources where appropriate to better serve their respective funds.

  • How will USD 30 million be used?

    The $30m will be used to defend existing problematic deals, not to finance liquid deals. For Liquid deals, the revolving of the cash flow will still happen, but either gradually, the trade transaction will be decreased (refinance only 90% of the previous deals) or the client will look for alternate finance, which could be the New Fund.

    It is a forward-looking budgeting exercise. It is open to change both up and down as the book is unwound. As the loans are unwound, the cash holding will be released

  • What does this structure look like on a high level?

    Structure

  • What information will be distributed, and what is the reporting frequency for the Existing and New Fund?

    Details of the reporting being provided by the New Fund will be set out in the Offering Memorandum for the New Fund. Concerning the Existing Funds, Investor Statements will be distributed monthly by MUFG, as per the current PPM's. Barak Fund Management will no longer distribute monthly Fact Sheets for the wind-down funds. Reporting will be produced quarterly and will follow the guidelines set forth by the current board members of the Existing SPC (Reporting)

  • Can Investor shares be split across Existing Funds and the New Fund?

    Yes. Shareholders can choose a percentage of shareholding to move to the New Fund while retaining the balance of their shareholding in the Existing Funds. 

  • What would the security implications on the loans be once they are transferred to the New Fund?

    There is no transfer of loans or securities to the New Fund.  Shareholders who opt to move to the New Fund will transfer their shares from the Existing Funds to the New Fund as consideration for their investment in the New Fund. Shares in the New Fund will then be issued to such shareholders.  The loans and accompanying security will remain with the Existing Funds (as lender of record). The shareholding in the New Fund will have the same economic benefits and rights to these loans and securities as they would have had ordinarily in the Existing Funds. 

  • What is the quarterly conversion to cash and sweep to New Fund?

    The Existing Funds Investment Manager will determine the cash requirements to support loans and budgets in the funds being wound-down on an ongoing basis.  When net cash is available for distribution, it will be distributed to all shareholders.

     
    Shareholders that do not wish to transfer their investments into the New Fund will have cash paid directly to their nominated bank accounts on record.  


    Shareholders who wish to transfer their shareholding into the New Fund will have their portion of any cash available for distribution paid directly to the ongoing share class of the New Fund via automatic reinvestment.  


    The quarterly cash flows forecast above will not be distributed to shareholders but will form part of the automatic reinvestment into the selected share class to continue to fund new borrowers and loans. 

    Based on our best estimate, as per the Investment Manager's models, an amount of up to USD 30 million will be required to protect and optimise existing illiquid loans. The Investment Manager will also not invest more than 25% of the USD 30 million in one illiquid asset without obtaining board approval supported by an independent valuation opinion to support the request. 

  • How will liquid and illiquid deals be wound-down?

    The intention will be to wind down all assets in the Existing Funds. We have a combination of liquid and illiquid loans. 

     
    The liquid loans will be run down over time, aiming to ensure that there is no fundamental disruption to the underlying borrowers, which could cause a loss of value. These liquid loans will be given time to find alternative funding lines while the Existing Funds funding lines decrease over time to the borrowers. 


    For the illiquid loans - routes to exit will be sought constructively: 

    a. The restructuring of the loans to better fit the businesses' cash flow forecasts, resulting in a longer tenor of the repayment profile.

    b. The perfecting the Existing Fund's security by legal means. Once this is achieved, find a route to create liquidity by exiting the asset without the assistance of the borrower.

    c. Working with the borrower to find an exit, either via refinance, sale of certain assets or raising equity.

    Regarding the illiquid assets, we expect that the vast majority of these assets will be liquidated over a 3 - 5-year period and do not forecast material cash flows in the first 36 months. 

  • Is there a queue for redeeming shareholders?

    No, all cash will be distributed as and when available and on a pro-rata basis to all shareholders at the same time. 

  • When will the first cash distribution to redeeming shareholders be?

    We anticipate advising shareholders about the date and amount of the first cash distribution in October 2021.  

  • Have the Existing Funds paid out any Redemptions during 2021 and 2020? If so, why have these redemptions been paid, and what was the total of such redemptions?

    Shareholders put in their redemption requests before December 31 2019, and those who became redemption creditors before the suspension commenced on March 31 2020, have been paid. No other shareholders have been redeemed since the suspension was introduced. 

  • How will the Investment Manager mitigate risks that could arise from a conflict of interest between the Existing Funds and the New Fund?

    The Investment Manager will work with the board of directors of both the Existing SPC and the New SPC and the Investment Committees of each SPC to manage any conflicts. Conflicts will be handled under the current conflicts policy. 

     
    Together with the Board of Directors of the Existing Funds, the Investment Manager intends to appoint a new Investment Committee member focusing on the wind-down of the Existing Funds. This appointment will be focused on a firm or individual with experience in advisory, orderly wind-down mechanics, and valuation. 

    Additional controls to further mitigate such risks would be the appointment of an independent valuation agent, and this appointment is explained further in the wind-down policy for the Existing Funds (Wind-Down Policy

  • What will the process be for the sell-down of illiquid assets?

    Please refer to the Wind Down Policy (Wind Down Policy). 

  • How will provisions be calculated going forward for the New Fund and the Existing Funds?

    Provisions will be calculated on the same principle as it is currently being performed. The current methodology used is the S&P Global Rating System coupled with the application of the International Financial Reporting Standards. 

  • How will the Investment Management team remain intact for the wind-down of the Existing Funds?

    The Investment Managers of both the New and Existing Funds will utilise resources from the pool of portfolio managers and investment teams. The team for the Existing Funds will remain in place, and there will be additions to this team with particular expertise in assets that require speciality workouts. The recoveries team will also have an incentive in place for full recovery as well as over recovery.  

  • Is there a different investment advisor to the new investment manager?

    At this point, there are no investment advisors. 

  • How can shareholders be sure you are driving both value and time of the wind-down?

    The Existing SPC  is ultimately controlled by the Board of Directors, who engage the Investment Manager on behalf of same.  The current process of the wind-down coupled with the offering of a New Fund structure has been determined by the directors to be in the best interests of all shareholders. Now that the Existing Funds will be officially wound-down, the Investment Committee and Independent 

    Valuation experts will ensure a measure of asset wind-down at an appropriate pace that ensures the best value to all shareholders.  The situation will be kept under constant review by the board during the wind-down of the Existing Funds to ensure that that position is maintained. 

  • Will the Existing Funds and the SPC be considered a going concern? Why?

    It will be a going concern for now, but eventually, it will be classified as not a going concern. The directors of the Existing SPC will be provided with regular financial reporting during the wind-down period to determine the relevant Existing Fund's financial status. They will keep the position under constant review. 

  • Is there a different fund administrator to the New Investment Manager?

    Yes, the fund administrator for the New Fund is Vistra. 


    Vistra counts 4,700 professionals as colleagues, and their physical presence in 46 jurisdictions across Asia-Pacific, EMEA, and the Americas, and they manage over 200,000 legal entities.  Their clients entrust them to administer assets valued at more than US$370 billion. 


    They count 30% of the top 50 Fortune Global 500 companies and over 60% of the top 300 private equity firms as their clients and partners. 

  • Will the Existing Funds continue to fund transactions during the wind-down?

    The Investment Manager has provided the directors of the Existing SPC with a projected value to approve, focusing on supporting borrowers over the next 12 - 18 months and allowing an orderly run-down of the facilities. This will ensure better recovery against the loans and afford borrowers the necessary time to restructure, recapitalise, pay down or refinance the existing facilities or contracts. The Existing Funds will not fund any new borrowers during the wind-down. 


    Based on our best estimate, as per the Investment Manager's models, an amount of up to USD 30 million will be required to protect and optimise existing illiquid loans. The Investment Manager will also not invest more than 25% of the USD 30 million in one illiquid asset without obtaining board approval supported by an independent valuation opinion to support the request. 

  • Will the New Fund Co-Fund transactions?

    Yes, the fund administrator for the New Fund is Vistra. While MUFG will remain the appointed one for the wind-down funds.

    The allocation of co-funding will depend on cash available and in line with the proposed fund strategy (Co-FundingPolicy). 

    The New Fund and the New SPC will be funding new transactions in line with their relevant mandates and target returns.  

  • Will the New Fund have the same auditors?

    Yes, at the outset, Macintyre Hudson Cayman Limited (MHA), a member of the Baker Tilly group, will be the appointed auditor.

  • What is the liquid vs illiquid split currently in the Existing Funds?

    As per the June 30 NAV date, illiquid assets currently represent 55% of the portfolio and liquid assets 45%. 

  • Can you provide a process on the current Secondary Market for Shareholders who would like to sell their units?

    The Investment Manager is currently exploring a secondary market platform and will communicate this to shareholders. 

  • There seems to be a movement from illiquid to liquid, but why don't we see an increase in the cash balance?

    The Investment Manager continues to manage the portfolio to ensure that the value of the underlying assets is maintained, which included the continuation of funding to liquid transactions that repaid some loans and required additional funding to complete or carry on with the import, export program, or contract. 

  • What is the financial status of the Existing and New Manager?

    The Existing Manager is in good financial standing and is a going concern. With the current AUM, the fees adequately support the operations. 


    The New Manager has existing AUM and fees and will be capitalised and financed by existing shareholders through the Barak Holding Trust.

  • What are the timelines associated with the New Funds launch, and when does the two-year lock-up period start for the Founder Share Class?

     The finalized PPM will be distributed to investors at the end of October 2021. The deadline for submission of the subscription forms is the 31st of December 2021. 

    The two-year lock-up for the Founder Share Class starts on the 1st of January 2022
     

  • Why were redemptions suspended?

    The COVID-19 pandemic resulted in disruptions to trade and businesses and related lockdowns severely impacted the borrowers' repayment profiles. This in turn had a knock-on impact on the segregated portfolios of the Company (the “Funds”).

    In the context of the restricted liquidity of the underlying investments of the Funds and the difficulty in reliably predicting the ability of borrowers to continue to make repayments, it became impossible to value the Funds’ investments with sufficient accuracy and, consequently, to allow subscriptions into and redemptions out of the Funds without causing potential prejudice to investors. It, therefore, became necessary for all the Funds to suspend subscriptions and redemptions.

  • What will the restructuring achieve?

    The Fund Manager has notified the board of directors of the Company that, for the foreseeable future, the investment objectives of the Funds are no longer reasonably achievable in accordance with the investment policies and restrictions set out in the POMs, notably the 90- day liquidity/redemption notice period.

    The Fund Manager has therefore recommended, in accordance with the Articles and the POMs, that the Company proceed with an orderly realisation of the assets of the Funds. This decision will not require investor approval. The Fund Manager still has faith in the investment strategy albeit with a longer liquidity profile in place. Many of the Funds' investors agree and wish to remain invested in these strategies. In order to accommodate those investors, and in order to address liquidity issues, the Fund Manager proposes firstly to form new funds ("New Funds"), and secondly to give investors a choice as to whether they wish to transfer their current holdings in the Funds into such New Funds or remain invested in the existing Funds, which, as noted, are being wound down.