Capita: Value of remaining £149m in Arch Cru unknown

Capita Financial Managers, which wants Arch Cru investors to accept a payoff linked to the sale of assets from the suspended fund range, has admitted that three-quarters of the remaining value of the cells is uncertain.

In accounts for the year to 31 March 2011, published on Monday, the authorised corporate director of the funds said there was now "significant difficulty and uncertainty" in ascertaining the recoverable amounts of the cell's investments.

For the CF Arch Cru Diversified Investment funds, it states: "In respect of investment assets carried in the balance sheet of the company of £36m there is uncertainty over approximately 70% of the value."

With the CF Arch Cru Investment funds there is uncertainty over approximately 75% of the value of £113m assets, it states.

The accounts confirmed that the sale in September of some of the private equity assets from Guernsey cells to JP Morgan Private Equity Ltd (JPEL) at a discount will cause a fall in the net asset values of some of the sub-funds.

The JPEL transaction disposed of a number of the Arch Cru cells' private equity assets for £56.5m of shares in JPEL.

The Arch Cru accounts cast further doubt on claims by Capita, BNY Mellon, HSBC Bank and the Financial Services Authority (FSA) that a deal brokered by the four will return 70% of capital held in the funds at March 2009 to investors, when added to amounts already paid out and the value of the remaining assets of the funds.

Investors have lodged a request at the High Court to judicially review the £54m deal - which FSA chief executive Hector Sants has encouraged them to accept - on the grounds it is unfair and lacking in transparency.

Of the £54m contributed to the payment scheme, £38.3m is allocated to investors in the CF Arch Cru Investment Funds and £15.7m to investors in the CF Arch Cru Diversified Investment Funds.

Gareth Fatchett, partner at Regulatory Legal Solicitors, which lodged the request on behalf of 2,700 investors, said: "The whole premise of the 70% of pre-suspension price is that it would be achievable. Capita managed this down to 65% and this downgrade makes this figure seem very optimistic.

"Our view is that the managed sale of CF Arch Cru assets will produce a significantly-worse return than predicted. To invite investors to release Capita from any liability first and then hope for a miracle is entirely unfair"

Elsewhere in the fund accounts, Capita stated information from Spearpoint, which took over management of the cells from Arch, forecast that Capita would be able to make a further capital distribution to investors in December.