There's hope for investors as one of the biggest private equity disasters of the financial crisis is scooped up by Newgate

 
Lucy White
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There are more than 200 investors with money in the funds which Newgate will manage out (Source: Getty)

Arle Capital Partners (ACP), the firm which was managing the portfolio of one of the most high-profile private equity victims of the financial crisis, has been acquired by Newgate Private Equity.

ACP had been contracted to manage out Candover Partners' portfolio, after the firm collapsed in 2009 when it found its listed arm was unable to meet its financial commitments following a string of badly-judged deals.

The latest sale of ACP will mean the firm dodges liquidation, after its contract to manage the last few assets in the Candover funds came to an end.

“The structure of the funds is complex, with over 200 investors and material value still to play for,” said David Morton, partner at Newgate.

“We believe our acquisition represents an innovative solution for investors, and prevents ACP from being placed in the hands of liquidators whilst considerable value is still at stake and commercial investment management decisions remain to be made.”

Newgate, which specialises in managing legacy portfolios, will manage the remaining investment which ACP had inherited from Candover – oilfield service company Expro International Group.

​Read more: Candover to launch a £500m sale

What happened to Candover?

Founded in 1980, Candover once had an enviable reputation. Its investments included betting group Gala Coral, Butlins holiday camp parent Bourne Leisure, and luxury yacht-maker Ferretti.

But it plunged into decline as the financial crisis hit, and high levels of debt in its portfolio companies meant investments struggled to return any cash.

A team of investors led by John Arney bought themselves out of Candover to set up ACP, with the aim of taking on the remaining portfolio companies and starting afresh, raising their own new fund.

But fundraising efforts failed, and when the contract to manage the remaining Candover assets expired this April, the ACP team no longer had a source of income.

Why did ACP sell up?

With investors having lost all faith in the ACP team to manage out the remaining investments, the firm announced plans to undergo a voluntary solvent liquidation this February.

But Newgate, which had been advising the boards of the old Candover funds, explored alternatives to the liquidation of ACP and agreed acquiring the firm was the best solution for investors.

It would have been a political impossibility for the ACP team to ask investors for more pay as they continued to attempt to manage out the portfolio, especially as they had already secured an extension of the fund once.

But Newgate, as a fresh face, was able to agree a management fee deal with investors.

“Newgate has a long track record in helping investors and private equity fund managers address complex issues. Once again we have invested our own capital to deliver a unique solution in complex circumstances,” said Morton.

Read more: Private equity assets reach a record of almost $2.5 trillion – double the size before the global financial crisis

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