Arch defends ‘best strategy’ Greek shipping investments

The chief executive of the firm that set up and managed the Arch Cru investment funds prior to their suspension has “vigorously” denied allegations that it caused the funds to collapse by investing in assets that it “lacked the necessary experience and skill” to manage.

SPL Guernsey, which was appointed as manager of the Arch Cru funds in October 2009, launched a £150m legal suit against Arch in December 2011.

In the particulars of claim, which FTAdviser has seen, SPL alleges that Arch invested “huge sums” in investments that “it lacked the necessary experience and skill competently to assess, arrange and implement”, particularly highlighting the funds’ Greek shipping investments.

However, Robin Farrell, chief executive of Arch, said in an interview with FTAdviser that the firm invested heavily in shipping as it was “our best strategy” and that it was simply the financial crisis that caused the industry to drop “off a cliff”.

He said: “The dry bulk market fell about 90 per cent in about a month, partly because people didn’t have money but also because there was a heart attack in the banking system. [This] meant that no one was issuing letters of credit and that is what you need to do international trade.

“If you look at the Arch fleets, it has done as well as the best guys out there but it doesn’t look good because it has fallen so much. It has been aggravated by the needs to wind it up as you are selling into the worst possible market.”

Mr Farrell claimed that that selling in this way will ultimately mean that the £160m worth of assets will be sold for far less than they should have achieved, around $15m.

Capita, the authorised corporate director of the funds, has denied this, stating that far from any fire sale the winding up of the assets “commenced in early 2010” and that they are being realised “on an orderly basis over several years, so as to try and achieve a reasonable value for them”.

To read the full interview with Mr Farrell, click here.