JP Morgan private equity trust to buy Arch cru assets

16 August 2011 10:52 am | By Chris Salih

JP Morgan private equity Limited has announced a deal to acquire the former Arch cru assets in a deal worth up to £56.5m.

The trust has entered into a conditional agreement with Private Equity IC cell, SPL Private Equity IC Limited and the SPL integrated Finance IC.

JPEL is to pay £36.7m, through the issue of of 44,727,053 new US equity shares issued at the JPEL’s unaudited US equity NAV share price at June 30, 2011, while a further £19.8m will be through the issue of a new class of 2017 Zero Dividend Preference Shares. The ZDP shares issued as part of the transaction will have a gross redemption yield of  8.25 per cent and will mature on December 31, 2017.

Following the conditional agreement, the cell funds have now written to shareholders to ask for approval for the deal.

JPEL chairman Trevor Ash says: “”This acquisition is part of JPEL’s strategy of continually repositioning its private equity portfolio. Currently, JPEL’s existing portfolio is weighted towards lower-middle market companies and the addition of the co-investment portfolio enables JPEL to gain access to middle market companies managed by leading private equity sponsors,

“JPEL anticipates that the co-investment portfolio will provide JPEL with positive growth and distributions from near term exits as well as from potential asset sales. It is likely that any distributions would be reinvested by JPEL in opportunistic secondary investments or distributed to shareholders through JPEL’s tender facility”

The news comes a week after the board of the cell companies that make up the Arch cru funds is preparing to launch a multi-million pound legal claim against Arch Financial Products over its management of the failed range

SPL Private Finance IC Limited chairman Hugh Aldous says the board and its advisers are preparing a claim against Arch FP - which acted as investment manager to the range - and has claimed that a “cascade of claims will follow against those who failed in their duty of care to the cells”.

As many as 20,000 people invested in the CF Arch cru fund range when it was suspended in March 13, 2009. The FSA recently announced a £54m package to compensate investors.

The board of the cell companies that make up the funds says the total sum invested into the cells by shareholders was £422m and that at March 31, 2009, before the market quotation for shares of the cells were suspended, their total net asset value was believed to be £341m. The market quotation for the cells was suspended on July 27, 2009.

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