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Arch suspends cru fund cells

Arch Financial Products has suspended the underlying cells investing in the CF Arch cru funds after discrepancies were found in their pricing.

This week’s Money Marketing reveals that the board of directors of the Arch Guernsey ICC have temporarily suspended the securities from their listing on the Channel Island Stock Exchange.

Arch has suspended a total of 25 cells, including the Arch cru private equity, private finance and sustainable opportunities cells. The board of directors of the Arch Guernsey ICC has decided to take these steps while it obtains the exact valuation of the cells’ holdings at the end of March 2009.

A spokesman for Arch’s administrator Bordeaux Services Limited says: “These cells have been suspended and it is hoped they will be priced in the next 28 days. This has happened after some discrepancies found recently that throw into question some of the valuations being received.”

Among the Arch cells suspended are the Africa Invest, Africa Protect and Africa Private Markets cells, so investors can no longer withdraw their assets from the Africa Invest plan and fund which is believed to hold around £11m of assets. The product is managed by Arch while cru handled the distribution in the UK, with the groundwork led by cru founder Jon Mag­uire. It will not affect the new Africa Invest transformation fund, which has no underlying cells and no inv­olvement from Arch.

The move follows the suspension of the £400m Arch cru Oeic fund range in March due to liquidity concerns. Tensions have developed between cru, Arch and Capita following the suspension while the FSA is looking into the matter.
Former Arch Financial Products chief investment officer Michael Derks is understood to have told advisers in April that the average discount between the last published net asset value across the 23 Guernsey cells and Arch’s fair value estimates is between 10 and 15 per cent but for the Arch private finance sterling IC limited sterling share class, the discount was nearer 30 per cent.

Cru managing director Marc Ainscough says: “The suspension means there can be no trading in the cells but, as the CF Arch cru range is also suspended, such trading was unlikely or minimal in any event. Remember that the Oeic funds were suspended because of the illiquidity of these cells on the secondary market, that is, the CISX, so there is unlikely to be any real impact.”

Arch says it is unable to comment on the investment activity of the funds as they are listed cells.


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