Risk Policy

2.1 No Guarantee of Capital Return

Your commitments purchase Units in the Fund at the prevailing unit price. The Fund invests in financial instruments (equities, bonds, money market) and real assets (REITs, private equity, agriculture) whose market values fluctuate. There is no guarantee whatsoever that you will recover the full nominal amount of your contributions. In adverse market scenarios, the value of your Units could be substantially less than your total commitments.

2.2 No Deposit Insurance

Atheq LLP is not a deposit money bank and is explicitly not covered by the Nigeria Deposit Insurance Corporation (NDIC) Deposit Guarantee Scheme. Your commitments are not insured by any government-backed guarantee. In the event of insolvency, dissolution, or winding up of the Fund, you rank as an unsecured creditor and may lose part or all of your investment.

2.3 Dilution Risk

When new Members join and make contributions, new Units are issued at the prevailing NAV-based unit price. If the unit price applied on admission is materially different from the “true” NAV due to valuation lag on illiquid assets, existing Members may be diluted. The Cooperative mitigates this through regular NAV recalculations and swing pricing mechanisms where applicable.

3.1 Foreign Exchange and Naira Devaluation Risk

Nigeria operates a managed float exchange rate regime administered by the CBN. The Naira has experienced significant and recurring devaluation against major reserve currencies (USD, GBP, EUR). Where the Fund holds assets denominated in or linked to foreign currencies, adverse Naira/foreign currency movements will reduce the Naira value of those assets. Conversely, abrupt CBN interventions may create exchange rate volatility that is difficult to hedge within the Cooperative’s cost structure.

3.2 Inflation Risk

Nigeria has experienced sustained double-digit consumer price inflation, driven by structural factors including fuel subsidy removal (implemented from June 2023), energy cost pass-through, exchange rate depreciation, and food supply shocks. Even where the Fund generates positive nominal returns, real (inflation-adjusted) returns may be lower, zero, or negative if the headline Consumer Price Index (CPI) as published by the National Bureau of Statistics (NBS) exceeds the Fund’s growth rate for a sustained period.

3.3 Fuel Subsidy Removal and Energy Cost Risk

The removal of the petrol subsidy in 2023 has materially increased energy and logistics costs across the Nigerian economy, which may adversely affect the profitability and valuation of portfolio companies in which the Fund invests — particularly in manufacturing, agriculture, and logistics sectors. Portfolio managers are required to factor energy cost sensitivity into investment decisions, but this risk cannot be fully eliminated.

3.4 Power Sector Risk

Nigeria’s electricity supply remains unreliable. Companies in the portfolio that rely on grid power bear significant generator fuel costs that erode margins. Reforms to the power sector may produce short-term tariff increases that negatively impact operations-dependent portfolio holdings.

3.5 Political and Sovereign Risk

Political instability, changes in government policy, expropriation, nationalisation, or sudden imposition of capital controls by the Nigerian government or CBN could adversely affect the Fund’s ability to operate, repatriate proceeds, or maintain the value of certain asset classes. Security challenges in parts of Nigeria may also affect real assets (agricultural land, logistics) held by the Fund.

4.1 General Market Risk

The Fund is exposed to systematic market risk — the risk that broad economic downturns, interest rate changes, commodity price movements, and global or domestic risk-off sentiment will reduce asset prices across most or all asset classes simultaneously. Diversification reduces but does not eliminate this risk.

4.2 Nigerian Exchange (NGX) and Capital Market Risk

The Fund’s Growth allocation (40% target) includes exposure to equities listed on the Nigerian Exchange Limited (NGX). The NGX All-Share Index is subject to:

• Low free-float and thin trading volumes in many mid- and small-cap stocks, making exit positions difficult to liquidate without price impact;
• Concentration risk — the index is heavily weighted toward banking, oil & gas, and consumer goods sectors;
• Foreign portfolio investor (FPI) outflows triggered by CBN policy changes or global risk events, which have historically caused sharp index corrections; and
• Regulatory changes by the Securities and Exchange Commission (SEC) that may affect market operations, settlement procedures, or permissible investment instruments.

4.3 Fixed Income and Interest Rate Risk

The Defensive allocation (40% target) includes Nigerian Treasury Bills (NTBs), FGN Bonds, and money market instruments. These are subject to:

• Interest rate risk:Rising interest rates cause the market value of existing fixed-rate bonds to fall. The CBN’s Monetary Policy Committee (MPC) rate decisions directly affect short-term yields and money market returns;
• CBN monetary policy risk: Abrupt changes in the Monetary Policy Rate (MPR), Cash Reserve Ratio (CRR), or open market operations can shift the yield curve significantly within a single MPC meeting cycle; and
• Sovereign credit risk: Although FGN securities carry no default risk in Naira terms (the government can print Naira), real returns may be eroded by inflation or currency devaluation.

4.4 Private Market and Illiquidity Risk

The Opportunistic allocation (20% target) includes private equity, early-stage companies, and agriculture-linked investments. These carry significantly higher risk:

• They are illiquid — there is no established secondary market and exit may require many years;
• Valuations are infrequent and subjective, meaning the stated value on periodic reports may not reflect what could be realised in a forced sale;
• Early-stage companies have a high probability of failure; and
• Agricultural investments are subject to weather events, crop failure, pest infestation, post-harvest losses, and market price volatility — risks that are amplified in Nigeria by inadequate storage infrastructure.

In a stress scenario, the Opportunistic bucket could suffer a total loss of the capital allocated to it.

4.5 Concentration Risk

Depending on investment opportunities available at any given time, the Fund may hold concentrated positions in specific sectors, issuers, or geographic regions within Nigeria. A single adverse event — e.g. regulatory action against a key bank holding, disease outbreak affecting an agricultural investment, or default by a bond issuer — could materially impair the Fund’s NAV.

4.6 Real Estate Investment Trust (REIT) Risk

REIT holdings within the Growth bucket are subject to property market cycles, vacancy rates, tenant default, and changes in rental income. In the Nigerian context, they are also exposed to FX risk where lease agreements are denominated in USD, and to infrastructure risks affecting property accessibility and value.

5.1 Lock-in Period

All Units are subject to a lock-in period of 60 months from the date of each individual purchase. You cannot access your committed capital during this period. An unexpected personal financial emergency occurring within the lock-in period may leave you unable to access these funds in time.

5.2 Early Exit Cost

Redemption of Units before the lock-in period expires incurs an early exit fee of 10% of gross redemption value. This fee is non-negotiable and non-refundable. It is allocated to the remaining Members as compensation for the liquidity disruption caused.

5.3 Settlement Period

Even after the lock-in period, approved withdrawal requests are settled within 60 calendar days. In periods of elevated withdrawal demand, market stress, or where the Fund holds a high proportion of illiquid assets, the Board may extend this period and notify affected Members in writing.

5.4 Redemption Gates and Suspension

Where simultaneous redemption requests would require a forced liquidation of illiquid assets at a material discount to their carrying value, the Board may impose redemption gates — suspending or deferring redemptions for up to 90 days (extendable by member vote). See Section 8.4 of the Terms of Service. During a gate, no redemption payments will be made, but the gate period does not constitute a breach of these Terms.

6.1 Cooperative and Securities Regulation

Atheq LLPoperates under the Companies and Allied Matters Act (CAMA) 2020 (Part D — Limited Liability Partnerships). Material changes to the legal framework governing LLPs, the Investment and Securities Act (ISA) 2007, regulations issued by the SEC, the CBN, or the Federal Competition and Consumer Protection Commission (FCCPC) could restrict or alter the LLP’s operating model, fee structure, admissible asset classes, or continued ability to operate.

6.2 SEC Regulatory Risk

If the SEC determines that the LLP’s operations constitute a collective investment scheme requiring SEC registration under the ISA 2007, the LLP may be required to register, restructure, or cease certain activities. The LLP monitors SEC guidance and will take all necessary steps to maintain compliance, but such regulatory changes could temporarily disrupt operations or increase compliance costs borne by the Fund.

6.3 CBN Policy and AML/CFT Compliance Risk

Changes to CBN KYC/AML/CFT requirements — including enhanced due diligence thresholds, transaction reporting obligations, or restrictions on certain payment channels — may impose compliance costs on the Cooperative or result in accounts being blocked pending re-verification. Members who fail to maintain satisfactory KYC status may have their redemption requests suspended.

6.4 Tax Risk

Nigerian tax law as it applies to LLPs, unit holders, and investment returns is subject to change by the Federal Inland Revenue Service (FIRS) or State Internal Revenue Services. Retrospective tax assessments, changes to withholding tax rates, or new levies on investment income could reduce net returns to Members. Each Member is individually responsible for their own tax obligations. We recommend seeking independent tax advice before joining.

6.5 Legal and Counterparty Risk

The Fund enters into contracts with brokers, asset managers, banks, and other counterparties. Default, insolvency, or fraud by a counterparty could result in financial loss. The Cooperative mitigates this by conducting due diligence on counterparties, maintaining diversified banking relationships, and monitoring exposure limits, but these measures do not eliminate counterparty risk.

7.1 Technology and Cybersecurity Risk

The platform relies on third-party cloud infrastructure (Vercel, Supabase), payment processors (Paystack), and communications providers. System outages, cyberattacks, ransomware, DDoS attacks, or software failures could temporarily prevent you from making contributions, viewing your portfolio, or submitting withdrawal requests. While the Cooperative implements industry-standard security controls — including TLS encryption, multi-factor authentication, and regular penetration testing — no system can be made fully immune to sophisticated attacks.

7.2 Data Breach Risk

In the event of an unauthorised access incident involving personal data, the Cooperative is obligated under the NDPA 2023 (Section 40) to notify the Nigerian Data Protection Commission (NDPC) within 72 hours and to notify affected Members without undue delay. A breach does not automatically result in financial loss, but reputational harm to the Cooperative may affect Member confidence and operational continuity.

7.3 Key Person Risk

The Cooperative’s Fund management quality depends in part on the judgment, availability, and integrity of its management team and appointed investment managers. Loss of key personnel through resignation, illness, or other circumstances could adversely affect Fund management decisions and operational efficiency during a transition period.

7.4 Payment Processor Risk

All contributions flow through Paystack. If Paystack experiences technical failures, regulatory suspension, or insolvency, the Cooperative may be temporarily unable to collect contributions or disburse redemption proceeds via the current payment channel. The Cooperative will seek alternative CBN-licensed payment processors in such an event but cannot guarantee immediate continuity of service.

7.5 Fraud and Social Engineering Risk

Members face risks from phishing emails, impersonation of the Cooperative’s communications, and account takeover attempts. The Cooperative will never ask you for your full password, OTP, or PIN by email, SMS, or phone call. Members are responsible for safeguarding their login credentials and reporting suspicious communications to security@atheqpartners.com immediately.