Capita settles Connaught claims for £18.5m


Capita has settled a claim brought against it as a former operator of the Connaught Income Series 1 Fund.

The firm’s half-year results, published today, show it paid £18.5m. It operated the fund – which was suspended in March 2012 – until September 2009.

The FCA is conducting a review into Capita and another firm’s role as operators of the fund. But Capita says it will not hold any cash against the outcome.

It says: “Due to the requirement to await the outcome of the formal review commenced by the FCA, the likely timeline for conclusion of this matter is uncertain.”

The results also reveal Capita has entered “full and final settlement” in relation to claims brought by Arch Cru investors. It does not reveal the terms of the deal but says the matter will be finished by the end of the year.

Capita paid £1.1m in professional fees relating to Connaught and Arch Cru in the half year.

The Connaught Series 1 fund was suspended in March 2012 and interest payments were not made to investors. A review was commissioned to ascertain its true value.

In 2012, Money Marketing revealed investors faced losses of up to 50 per cent. An independent review by Duff and Phelps suggested recoveries would be between £46.5 and £53.2m of the £105.5m used to fund Tiuta.

A decision to wind down the Series 1 and £18m Series 2 fund, which was used to fund another Tiuta subsidiary called Tiuta Development Finance, was made in June 2012. A Series 3 fund, which was not linked to Tiuta loans and raised around £22m, was wound down in July 2012 due to a spike in redemptions.

Connaught Asset Management bought Tiuta International and Tiuta Development Finance, the Tiuta Plc subsidiaries that used the Series 1 and Series 2 funds respectively, for £1 in June 2012. In July 2012, Money Marketing revealed Tiuta International had been placed into administration by CAM.