The Heart of Africa investment fund, launched in late 2007 by New Star as the first of its kind for private investors, is being wound up due to market conditions.

The Heart of Africa investment fund, launched in late 2007 by New Star as the first of its kind for private investors, is being wound up due to market conditions.

New Star, which is being bought by Henderson for £22m or just 2p a share, suspended dealings in the fund two months ago after two-thirds of its value had been wiped off between August and December.

"Since that announcement, the investment climate in the sub-Saharan African equity markets has continued to deteriorate as the repercussions of the credit crunch are felt more globally," the group said yesterday. "It has become increasingly apparent that to reopen the fund to dealing would significantly disadvantage the remaining investors."

It said that after consultation with the Financial Services Authority, a winding-up had been agreed.

When dealing was suspended the fund had lost 24% since launch, against a 39% loss for the emerging markets index.

The fund aimed to invest in telecoms, consumer and infrastructure companies in more mature markets such as Nigeria and Kenya, though it was criticised for the relatively small proportion invested in Africa during the first year, with cash and other holdings helping performance.