Capita Financial Group - Return to site home page

CF Arch Cru Diversified Funds – Suspension continuation 3 April 2009:

CF Arch Cru Income Fund, CF Arch Cru Balanced Fund, CF Arch Cru Finance Fund, and CF Arch Cru Global Growth Fund (sub-funds of CF Arch Cru Diversified funds, an Investment Company with Variable Capital) (the "Funds")

Capita Financial Managers Limited (“CFM”) as the Authorised Corporate Director of CF Arch Cru Diversified Funds (“the Funds”) wrote to shareholders on 13 March 2009 to advise that dealings in shares were suspended with immediate effect.  During the suspension, no requests to redeem, purchase or transfer shares would be accepted.

Dealings were suspended because two other funds of which CFM is the Authorised Corporate Director and of which Arch Financial Products LLP is the delegated investment manager had been suspended due to significant illiquidity in the assets of those funds.  The Funds share similar underlying holdings with those other funds, although with different asset allocations.  In addition, there is overlap between shareholders in all six funds.  

We therefore considered that the suspension of the other funds would lead to an increased likelihood of requests for the redemption of shares in the Funds.  There was also significant lack of market liquidity in the assets which comprise the Funds portfolios.  We therefore concluded that it was in the interests of all shareholders to suspend dealings in the Funds.

When we wrote to shareholders on 13 March 2009 to inform them of the suspension, the prospectus required that the suspension of dealing must not exceed 28 days, and that any extension to this would require the approval of the Financial Services Authority (“FSA”).  We have now amended the prospectus to align it with new provisions contained within the FSA handbook. 

The prospectus requires that CFM and the Depositary formally review the suspension at least every 28 days and to inform the FSA of the review and any change to the information given to Shareholders. In keeping with this requirement we have reviewed whether the exceptional circumstances that gave rise to the suspension of dealing have changed or ceased.  Following discussions with Arch Financial Products LLP, the delegated Investment Manager of the Funds, and an examination of the latest asset liquidity position of the two other funds, we have concluded that there have been no significant improvements in the liquidity of the assets and so, in our opinion, suspension of the two other funds remains in the best interests of their shareholders.  The Funds also continue to share similar underlying holdings with those funds, although with different asset allocations and there remains overlap between shareholders in the Funds and those other funds.      

We remain of the opinion that the suspension of those other funds would, if the suspension of the Funds was to be lifted, continue to lead to an increased likelihood of requests for redemption of shares in the Funds.  In our view the lack of market liquidity in the assets in the Funds portfolios also remains.  We have therefore concluded after consultation with the Depositary of the Funds that it will be necessary for the suspension to continue beyond 9 April 2009, being the 28th day of suspension.  This decision has been advised to the FSA.

We are currently:

We are also conducting a similar exercise in relation to the two other funds.

Given that we will wish to take account of the conclusions of this work before determining how best to proceed in the interests of shareholders, we are of the opinion that it is likely that the suspension will need to be extended to at least the end of May 2009. We will, however, continue to keep shareholders informed appropriately of progress and, to the extent possible, the likely further duration of the suspension.  If, in the meantime, there is a material change in the circumstances that led to the suspension, then we shall of course consider whether to activate a resumption of dealings in the Funds.  We will write to shareholders at that point to inform them of any such planned resumption.   

The interests of all shareholders in the Funds are of paramount importance to us and we are working with our delegate investment manager, Arch Financial Products LLP, and specialist advisers to ensure that our actions best serve those interests. 

Please contact us on 0845 6080958 or alternatively email us at technical.services@capitafinancial.com with any questions regarding the suspension of dealings in the Funds.

Capita Financial Group is a trading name of Capita Financial Group Limited ("CFG"), registered in England Number 3669630, registered office 17 Rochester Row, London, SW1P 1QT.

Full FSA regulatory information and registered details for CFG, its affiliates, subsidiaries and associated companies, is available within the Legal Statement.