Investment manager takes controlling stake in IT as litigation looms

The Arc Capital Holdings investment trust has been taken over by its former investment manager as the investment trust’s board sues for negligence.

Shares in the £47m Aim-listed investment trust spiked almost 50 per cent to 28 cents in early December, leading the company to believe it was the target of an on-market takeover by Arc Capital Partners, its former investment manager.

That has now been confirmed with Arc Capital Partners’ parent, PAG Holdings, declaring a 50.09 per cent position in the fund through subsidiaries Arc Capital Partners, ACP Trading and Cielo Overseas.

The fund has been winding down since January 2012 after a series of botched Chinese investment deals made by Arc Capital Partners.

The investment trust’s board is suing Arc Capital Partners for negligence for at least RMB480m (£49.65m) as compensation. Arc Capital Partners resigned from its management contract in August.

In an announcement on Aim, PAG Holdings has demanded an extraordinary general meeting to replace three directors of the investment trust with people of its own choosing.

It is unclear whether PAG Holdings would be able to use its majority shareholding to harpoon the litigation against its subsidiary, effectively saving itself tens of millions of dollars.

The investment trust directors had tried to prevent PAG Holdings’ raid by passing a resolution enforcing a complete buyout of shareholders for anyone amassing more than 30 per cent of the company.

However, according to filings it was too late with PAG making its purchases before the rule was passed on 10 December.