New Star Asset Management was dealt a further blow today as one of its highest-profile fund managers was forced to suspend dealing in his sub-Saharan portfolio because of rising investor redemptions.

Jamie Allsop, who manages New Star's Heart of Africa Fund, insisted the closure was temporary and dealing would begin again as soon as possible after a maximum 28-day period set by the Financial Services Authority, the regulator.

"It's really regrettable. I'm going to do everything I can to reopen the fund as soon as possible," Mr Allsop told Times Online.

The fund, launched in November last year, has been hit by investor redemptions. Valued at £58 million at the end of October, it almost halved to stand at £29 million, according to most recent figures.

The fund, which Mr Allsop said invests in traditional listed equities, has fallen 24.4 per cent in the past year, according to Lipper, the investment research firm.

While small, the closure of the fund represents the latest in a growing list of troubles for New Star, founded eight years ago by the charismatic market veteran John Duffield.

New Star was put up for sale this week by its syndicate of five lending banks, who took control of the group after agreeing to forgive its £240 million debt burden in exchange for an equity stake of up to 94 per cent.

HBOS and Lloyds TSB lead the syndicate, which also features Royal Bank of Scotland, HSBC and National Australia Bank.

The banks are currently running a twin-track process, preparing to consider potential offers for New Star while at the same time pressing ahead with a delisting slated for the end of January.

The banks were propelled into action after New Star, beset by institional redemptions and a 90 per cent drop in its share price, shut the door on its International Property fund several weeks ago.

Trade buyers, including Aberdeen Asset Management and Neptune, alongside private equity investors, are expected to table bids in the region of £120 million. UBS, the Swiss investment bank, is handling the sale.

New Star said the Heart of Africa Fund's liquidity had been hit on several fronts.

In Nigeria, where it is about one third invested, the end of the Hajj festival has meant that Mr Allsop has not been able to sell shares to meet redemption calls. Further restrictions on foreign exchange flows mean the fund is having to wait for about $6.2 million in proceeds from the sale of securities.

In Ghana, where more than a fifth of the fund is invested, uncertainty over the outcome of yesterday's general election led to slower trading volumes on markets.

A close call on the winner of the election means a run-off vote will be held, further hampering dealing activity, New Star said.

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