ARCH Arc Capital

 

TIDMARCH 
 
RNS Number : 2649U 
ARC Capital Holdings Limited 
13 October 2010 
 

ARC Capital Holdings Limited 
13 October 2010 
 
 
                          ARC Capital Holdings Limited 
                                    ("ARCH") 
 
 
                        Shanghai Supermarket Holding Sale 
 
ARC Capital Holdings Limited ("ARCH") (AIM: ARCH), is pleased to announce that 
on 11 October 2010 it completed the sale of its entire stake in Shanghai Jiadeli 
Supermarket ("Jiadeli" or the "Company") to Shanghai Haihang Jiale Enterprise 
Management Co. Ltd. The total consideration for the sale is expected to be 
RMB1.1 billion (equivalent to US$164.8 million), approximately US$5.7 million 
more than the 31 August 2010 carrying value of US$159.1 million. RMB100 million 
of the total consideration will be held back by the buyer with payment subject 
to completion of a post closing audit. The sale, including the holdback, 
represents a 1.9x cash multiple and an IRR of 25.7%. 
 
Established in 1998 as a traditional mid-size supermarket chain, the Company has 
grown to become the third largest supermarket network in Shanghai operating 150 
stores. ARCH invested a total of US$89.1 million in tranches between January 
2007 and August 2008. Since ARCH took over the Company, the Manager's retail 
operations team implemented a development strategy which dramatically improved 
operating efficiency and profitability resulting in EBITDA growth of 65% and net 
profit growth of 171% during 2009. 
 
The transaction is the first control investment in ARCH's portfolio to have 
completed a full buyout cycle, from acquisition to operational transformation 
and ultimately ending in a successful sale. Allan Liu, Managing Partner of ARC 
Capital Partners Limited, the Manager of ARCH commented: "Through the insertion 
of key management professionals and the deployment of ARCH's deep knowledge and 
expertise in the China consumer retail industry, we were able to rapidly 
accelerate the development of Jiadeli into one of Shanghai's leading supermarket 
chains, creating value for the Company. The sale at this time generated an 
optimal return for shareholders and realises the value of ARCH's investment of 
time, expertise and capital." 
 
As realisation proceeds are in RMB, it could take up to six months for 
repatriation due to foreign exchange controls in China. As and when the funds 
are available to ARCH, they will be applied in accordance with the guidelines 
announced on 1 April 2009, namely to use substantially all proceeds (in the form 
of principal and profits) from realisations to fund distributions to 
shareholders through share buy-backs, tender offers or capital distributions, 
subject to serving payables and funding contractual follow-on commitments to 
existing portfolio companies. 
 
In accordance with the guidelines, ARCH will continue to withhold from making 
any new investments until the Independent Directors determine otherwise. The 
Independent Directors will determine (i) whether to approve funds to be used to 
make follow-on investments; and (ii) when new investments may be made. In making 
these determinations, the Independent Directors will have regard to the 
alternative use of funds in effecting shareholder distributions, including the 
potential short-term increase in NAV per share that may result from share 
buybacks. 
 
A further announcement will be made in due course as to the method, extent and 
timing, if any, of distributions to shareholders. 
 
 
For more information, please contact: 
 
+---------------------------------+------------------------------+ 
| MANAGER:                        | LEGAL COUNSEL:               | 
| Allan Liu, Managing             | Jon Lewis, General           | 
| Partner                         | Counsel                      | 
| c/o ARC Capital Partners        | c/o Pacific Alliance         | 
| Limited                         | Group                        | 
| 13/F St. John's Building        | 16/F St. John's Building     | 
| 33 Garden Road,                 |                              | 
| Central, Hong Kong              | 33 Garden Road,              | 
| T: (852) 3115 0243              | Central, Hong Kong           | 
| F: (852) 3115 0244              | T: (852) 2918 0088           | 
| aliu@pacific-alliance.com       | F: (852) 2918 0881           | 
|                                 | jlewis@pacific-alliance.com  | 
+---------------------------------+------------------------------+ 
| BROKER:                         | NOMINATED ADVISER:           | 
| Hiroshi Funaki                  | Philip Secrett               | 
| LCF Edmond de Rothschild        | Grant Thornton Corporate     | 
| Securities                      | Finance                      | 
| T: (44) 20 7845 5960            | T: (44) 20 7383 5100         | 
| F: (44) 20 7845 5961            | Philip.J.Secrett@uk.gt.com   | 
| funds@lcfr.co.uk                |                              | 
+---------------------------------+------------------------------+ 
| MEDIA RELATIONS:                | MEDIA RELATIONS:             | 
| Sophie Hoggarth                 | Andrew Walton / Laura        | 
| Pacific Alliance Group          | Pope                         | 
| T: (86) 21 6113 5818            | Financial Dynamics,          | 
| shoggarth@pacific-alliance.com  | London                       | 
|                                 | T: (44) 20 7269 7100         | 
|                                 |                              | 
|                                 | Christine Wood / Queenie     | 
|                                 | Tsao                         | 
|                                 | Financial Dynamics, Asia     | 
|                                 | T: (852) 3716 9800           | 
+---------------------------------+------------------------------+ 
 
 
About ARC Capital Holdings Limited 
 
ARC Capital Holdings Limited ("ARCH") (AIM: ARCH) is a closed-end investment 
company with net assets of US$606.0 million as at 31 August 2010. ARCH was 
admitted to trading on the AIM Market of the London Stock Exchange in June 2006. 
ARCH makes and holds investments in the retail, consumer goods and consumer 
services sectors, principally in China but also in neighboring Asian countries. 
Target investments include regional hypermarkets and supermarkets, dominant 
consumer brands, specialty retail chains, retail property assets and retail and 
consumer service providers. 
 
For more information about ARCH, please visit: www.arch-fund.com 
 
ARC Capital Holdings Limited is a member of Pacific Alliance Group ("PAG"), one 
of the leading Asian alternative investment managers. Founded in 2002, PAG 
manages funds covering private equity, real estate, hedge fund and distressed 
investments and has offices across Asia including Hong Kong, Shanghai, Beijing 
and Tokyo. 
 
For more information about Pacific Alliance Group, please visit: 
www.pacific-alliance.com 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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