Financial advisers have been warned that Direct Share Purchasing Corporation (DSPC) has made a new round of unsolicited offers to buy frozen mortgage fund units at a discount that is as deep as 71 per cent.
Australian Unity Investments (AUI) head David Bryant said DSPC, run by Australian businessman David Tweed, had again contacted unit holders of its mortgage funds with “outrageous” offers of as little as 29 cents for each $1 unit.
“We think it’s outrageous that someone would offer to buy units from investors – some of whom are elderly or don’t have financial advisers – at a fraction of their true worth, and we are urging those that do have an adviser to contact them before making any decisions,” Bryant said.
“Both our mortgage funds have maintained a $1 unit price despite the events of the last few years.
“Compared with other investments, mortgage funds are one of the very few asset classes to achieve this outcome for investors during the global financial crisis, and DSPC’s offer of, in some instances, 29 cents per unit has absolutely no justification.”
A Challenger Financial Services Group spokesperson said Challenger Howard Mortgage Fund unit holders got new proposals at 30 cents per unit, but had not received offers in relation to other funds.
“We are aware that a handful of unit holders have accepted the 30 cents offer in relation to small unit holdings,” the spokesperson said.
“These unit holders have asked us to assist their situation and having regard to our obligation to act in their best interests, we have taken legal advice from a special counsel to clarify the operation of the DSPC offer.”
Colonial First State (CFS) was aware of offers ranging from as low as 35 cents to as high as 80 cents, a CFS spokesperson said.
Earlier in the year, DSPC made offers to buy the units of some CFS Mortgage Income Fund investors at 80 cents each, paid as a lump sum.
CFS general manager of distribution Marianne Perkovic warned in September that DSPC was known for “having made offers considered to be below value to investors in other companies on previous occasions”.
In the past, Tweed, through his other firms, has made unsolicited offers for shares of companies including Commonwealth Bank of Australia, Australian and New Zealand Banking Group, AMP and Axa at a significant discount to their worth at the time.
ASIC put out a warning about the unsolicited frozen fund offers on 30 November.
“ASIC has received complaints from investors who have received unexpected offers to buy their units in frozen funds at prices less than the total amount that investors could expect to receive from their funds under a redemption facility or withdrawal offer,” the corporate watchdog said in a statement.
Almost $15 billion was frozen in mortgage funds as of July, according to research house Morningstar.
