I'm working on a blog post on the CD4 withdrawal issue. I can't believe what I'm reading in the PDS and how this fund was launched with this massive flaw, or how any responsible (professional/ ethical/ competent) entity or financial advisor could have been invovled in this travesty!
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Term of the FundThe Fund does not have a fixed investment term and is designed for the
long-term investor. The Responsible Entity intends that the Fund will hold
investments indirectly through the LP for up to 10 years and to make
distributions as the investments are realised.
There will be no right to
redeem Units unless the Responsible Entity chooses to make a pro rata
withdrawal offer. When the Units are fully paid, the Responsible Entity
may seek to publicly list the Fund in order to provide liquidity.
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Unit Liquidity Risk
Once the Units are fully paid up, the Responsible Entity may apply for
the Fund to be listed, or if it remains unlisted the Fund may return capital
to investors by way of capital distributions as investments are realised.
However, neither outcome can be guaranteed. Unitholders may have
limited or no opportunity to realise their investment in the Fund as there
is no fixed term for the Fund, there will not be a right to redemption
of Units unless the Responsible Entity chooses to make a pro rata
withdrawal offer, and the Fund will be unlisted. While there will not be a
ready market for selling Units, the Responsible Entity has the discretion
to permit transfers.
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5.4 Liquidity, redemptions and transfers
Once Units have been issued under the Offer, investments in the Fund should be considered illiquid. The Fund will not have
an ongoing or periodic redemption facility.
The Responsible Entity retains the right, but has no obligation, to provide liquidity to Investors and if it decides to do so, it will
notify Investors and advise them of its policy for redemptions or withdrawals, which will be subject to the Fund’s constitution
and the Corporations Act.
Investors may be able to exit the Fund by transferring their Units to a third party. Please note there is no ready market for
transfers of Units and there is no guarantee that Investors may find a purchaser for their Unit holding. The Fund’s Constitution
provides that all transfers of Units must, among other things, be in a form approved by the Responsible Entity and will only
be effective upon entry into the register of Unitholders. Notably, the Responsible Entity may refuse to record any transfer in
the register without giving any reason for the refusal.
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6.3 General investment risks
a) Unit liquidity riskInvestors have no rights to withdraw from the Fund, unless the Responsible Entity makes a withdrawal offer. The Responsible
Entity does not currently intend to make any withdrawal offers. As a result, investors will have limited opportunity to realise
their investment in the Fund as there is unlikely to be a ready market for selling Units.
The Responsible Entity considers an investment in the Fund to be a long-term investment. Potential Investors should only
invest in the Fund if they are willing to adopt a long-term investment approach.
The Fund does not have a fixed term, but the Responsible Entity expects that the Fund’s investment term will be up to 10
years. It is important that investors understand that if they invest in Units they have no right to exit the Fund, and to receive
the proceeds of redemption or a return of capital, at any time. In particular investors should have no expectation of an exit
right after 10 years and should not invest in Units if a longer, potentially significantly longer, investment term of the Fund, the
illiquidity of the Units or no exit rights is not suitable for them.
Once the partly paid Units are fully paid, the Responsible Entity may seek to publicly list the Fund in order to provide liquidity.
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13.1.9 Withdrawals will be limitedThe Constitution provides for Unitholders to request
redemption of their Units while the Fund is liquid, as defined
in the Corporations Act, but the Responsible Entity is not
obliged to accept or process such requests. Once the
Fund’s assets are invested through the LP, the Fund is
expected to be illiquid, and he Responsible Entity will only
be able to redeem Units pursuant to a pro rata withdrawal
offer under the Corporations Act.
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(20min delay)