Vulture fund plan withdrawn

A vulture fund offer which sought up to $50 million from the public to buy bargain-basement office blocks has been withdrawn.

Blacksmith Property Fund's prospectus was registered in February to issue shares but fund director Peter Wall said yesterday the offer was being revised. The prospectus had been withdrawn after falling short of raising the $25 million target, he said.

A new fund was being planned after extensive criticism of Blacksmith.

"Following market feedback from investors, financial advisers and industry commentators, the Blacksmith directors plan to reshape elements of the offer and to relaunch the fund shortly," Wall said.

The fund did not plan to make payments initially, but when returns did kick in, annual interest of 12 per cent was forecast.

Vulture funds - common in the United States and Europe - are designed to take advantage of distressed sellers and pick up bargains in difficult economic times and Wall said he thought the time was right for such a fund in New Zealand.

Three industry experts were behind Blacksmith: Wall, former chief executive of the listed AmTrust Pacific and former Brookfield Multiplex New Zealand managing director, Bryce Barnett, founder and manager of syndicator KCL Property Group, and Jack Porus, managing partner of lawyers Glaister Ennor.

Bruce Sheppard, Shareholders Association chairman, had criticised the offer and said yesterday Blacksmith had heeded that.

"As directors we attempted to structure the fund to ensure investors' rights were protected and to achieve the correct balance between commercial risk, return on investment and managers' remuneration," Wall said.

Sheppard slammed the fund because its bosses had not backed it financially. He said funds which asked the public for money but whose directors did not contribute large amounts themselves should be avoided.