The wind-up application was brought by the Guernsey Financial Services Commission (GFSC) after all of the directors of both companies resigned on 4 and 5 August, having informed investors that the fund had been suspended on 29 July.
Although not regulated by the GFSC, the commission made the application for the winding up of Providence Global following the court appointment of Deloitte as administrators to its local operation on 9 August.
As part of Deloitte’s review it became evident that the Providence parent company was insolvent. The firm was appointed joint liquidators of Providence Global on 22 August and will proceed with the orderly winding up of the business.
Brazilian company
Providence Global is also owner of the Brazilian factoring company, Providence Fomento Mercantil, Investimentos e Participações into which the fund invested.
The closed-ended absolute return fund aimed to provide investors with annual returns of between 7% and 14.25% from investments in Brazilian debt, specifically the factoring of receivables (the purchase of debt) of small and medium-sized businesses.
The fund lent money to the factoring company based in São Paolo for between 30 and 180 days. The short term debt was purchased at a discount of more than 2% per month with the returns collected at par.
The minimum investment was $50,000, €37,500, or £30,000.
Deloitte determined that in order for the position of monies lent to Providence Fomento to be established, access to the records of Providence Fomento is required.
Jersey link
Jersey’s financial services regulator has launched its own investigation into the sale of Providence Investment Funds to clients of Jersey-based IFA firm Lumiere Wealth, which is majority owned by Providence Global.
