Distressed investors in the Cytonn High Yield Solutions (CYHS) fund by Cytonn Investment now plan a class action suit against the company.
In a revelation in a public notice published in the local dailies on June 25, 2021, agitated investors are planning to group up and coordinate a joint litigation against Cytonn.
The notice lists contacts to the coalition of the distressed investors.
The list entails the email address, mobile phone lines and a telegram group labelled AGGRIEVED CYTONN HYS INVESTORS’.
Please join a group of similar aggrieved investors that have come together to coordinate a class action civil suit to recover your full investment and returns on the investment and institute criminal and other proceedings against the perpetrators of the schemethe notice reads.
The planned class suit sets up Cytonn Investment for a legal showdown which further implicates the Capital Markets Authority (CMA).
Further, the planned class suit relates to the non-payment of investors in CYHS after the end of tenures for the investments sunk primarily to real estate projects.
The aggrieved investors cover an elite group of Kenyans referred as ‘sophisticated investors’ by the CMA and who sunk a minimum Ksh.1 million in the fund and expected a return upwards of 14 per cent.
At the end of the investing period however, Cytonn has been unable to reimburse the investments and the accompanying interest sighting liquidity challenges in respect to the fund.
Last year, the board managing the CYHS approved a one-year moratorium allowing Cytonn to skip repayments to investors.
Earlier this year, Cytonn recommended a further roll over of the funds falling due or an alternative debt to real estate conversion under which investors would receive housing units under the company’s wing.
However, the conversion requires investors to top up funds to receive the units, an aspect that has further aggrieved the investors as they doubt the legitimacy of Cytonn and its respective products.
CYHS has about 4,000 invested Kenyans for a total of Ksh.13.5 billion.
Meanwhile, Cytonn has been hoping for reprieve from the pool of investors as it works to enhance the liquidity of CYHS to enable payments.
Cytonn’s real estate has an estimated asset base of over Ksh.100 billion mostly made up of residential real-estate projects.