Capita Financial Managers’ latest accounts reveal the recent deal to offload some of the underlying investments in the Arch cru funds to JP Morgan Private Equity Limited has pushed down the net asset value of the funds by up to 20 per cent.
Capita, the authorised corporate director of the Arch cru funds, told investors earlier this month the average amount to be returned under the FSA-agreed £54m compensation package has fallen to 66 per cent of the value of the funds at suspension.
The impact of the JPEL deal was reflected in the 66 per cent estimate.
The FSA announced the £54m compensation package agreed between Capita, BNY Mellon Trust & Depositary and HSBC Bank in June. When it was announced the FSA estimated investors would receive an average of 70 per cent of the value of CF Arch cru funds as at March 2009 when the fund range was suspended, alongside distributions already made and remaining assets.
In September some of the Guernsey cell companies, which the Arch cru funds were invested in, sold a number of their private equity assets to JPEL for £56.5m in JPEL shares.
The deal helped fund a distribution made to investors last week, but has also contributed to a fall in the funds’ value. This is because the assets sold by the Guernsey cells were sold at around a 30 per cent discount to previous net asset values.
Despite the discount the board of the Guernsey cells approved the deal, as it felt it was better to have some certainty over the realisable value of the assets.
Capita’s accounts for the six months to September 30, published yesterday, show that the NAV of the CF Arch cru investment portfolio has fallen by just over 20 per cent since the end of March. The NAV of the CF Arch cru specialist portfolio has fallen by just over 17 per cent over the same period.
Justice for Finance Services and Regulatory Legal have both filed for the compensation package to be judicially reviewed.
Investors who accept the offer from the compensation package can pursue their IFA to recoup the rest of their original investment.