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Artemis Alpha writes down URICA

Artemis Alpha outperforms in year of transition

Artemis Alpha writes down URICA – Artemis Alpha Trust says that its NAV has been reduced by 2.2% as a result of an impairment taken to the value of its holding in URICA Ltd, a company operating in the supply chain finance industry. This represents the total amount originally invested in URICA at cost.

The managers did not consider it to be in the fund’s best interests to provide additional funding for URICA’s immediate liquidity requirements. That is because of potential liabilities that arose from a one-off event in France, which led to a deterioration in the quality of URICA’s managed book of invoices. This ultimately led to URICA being put into a process of liquidation.

They describe the impairment of URICA as “unexpected and disappointing” and point to “positive developments elsewhere in the portfolio”. NAV performance year-to-date has been 9.9% after taking an overall negative impact from URICA of 4.0% – a write down of the investment was made earlier in the year. The managers say that they believe that encouraging progress has been made in the realisation of unquoted investments (15.2% of NAV) and the implementation of the revised investment strategy.

URICA was founded in 2013 by Lindsay Whitelaw, a former manager of technology funds at Artemis. It appears to have collapsed after one of its customers perpetrated a fraud on the company.

[QD comment: After a run of poor performance, Artemis Alpha has had a better period this year. Even after this news, over a year it is the fourth best performing fund in the UK All Companies sector, behind Crystal Amber (which has been driven up by a recovery in the share price of Hurricane Energy), Manchester & London (which is really a global fund nowadays) and Henderson Opportunities.]

Update 24 July

P2P Global also had an investment in URICA – The company wishes to clarify the position in relation to one of its underlying investments, URICA, in which it has an equity investment and provides a revolving credit facility. The equity investment is in URICA Limited, a company domiciled in Scotland, which has a carrying value of cGBP5.5m. The initial investment was made in October 2015. URICA Limited was placed into provisional liquidation on 20 July 2018 by the Court of Session in Edinburgh, and as a result the company has concluded that its equity investment should be written off. This represents 0.74% of the last published NAV.

P2P provided a revolving credit facility to URICA Europe Limited, a Jersey vehicle established to acquire interests in English and French invoice finance receivables for which URICA Limited acts as servicer. The outstanding exposure is cGBP24.4m.  URICA Europe Limited has not been placed into administration, and is not part of the URICA Limited group and its ownership of receivables is bankruptcy remote from the insolvency estate of URICA Limited. New funding under the revolving credit facility has been restricted and the company is working with key contacts within URICA Limited and other counterparties to ensure that the receivables owned by URICA Europe Limited continue to be serviced and managed effectively. The receivables are short term in nature and also benefit from credit insurance.

ATS / P2P : Artemis Alpha writes down URICA

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