Friday, July 19, 2024

Cash withdrawals at Cytonn rise as Dande admits struggle

Cytonn Investment Products: Cytonn Investments chief executive officer Edwin Dande has come out to explain the situation at Cytonn Investments. In a report that was published in the Standard newspaper on Thursday, Mr. Dande said that Cytonn was witnessing increased cash withdrawals from investors.

He however refused to disclose the amount of withdrawals that had been made, saying that it was nothing to worry about. “I know the amount but its confidential nothing to worry about you’ll not hear any money market fund investor saying I can’t get my money,” said Dande.

Dande further disclosed that the investment firm was facing a Covid-19 negative financial impact and had been forced to restructure some its investment products.

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“Every real estate developer is dealing with those issues as long as you have good mitigation measures you will be fine but you have to explain yourself to investors and the public, in the same way, were doing,” said Dande. He noted that this was the reason why maturity of the firm’s products had been prolonged or extended.

The investment firm has been in soup over the last few days after it emerged that some investors had reported it to the Capital Markets Authority for failing to honour maturity terms for investments totaling about Sh. 123 million. It also emerged that one of the investors had taken the firm to court.

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The firm has also been accused of over promising high returns to lure in investors. It gives returns of close to 20 per cent in some of its products. But Dande said these returns were nothing to worry about. According to the Standard report, he also defended the firm’s business model which pool funds from the public and deploy the monies raised for investments mainly into real estate projects. He explained that a typical transaction happens where a person takes, for example, Sh. 100,000 to a bank and gets almost no returns and then Cytonn as a real estate borrows from the bank and has to pay high interests of between 14 – 18 per cent.

Alarm as Cytonn fails to pay investors Sh. 123 million dues

“Our model structures out the banks, we’ve created investment vehicles whereby instead of you taking Sh100,000 to the bank and get nothing I just come directly to you and say give me and I’ll pay you 14 to 18 per cent interest annually,” he said on the Cytonn investment products.

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