ARC Capital Holdings Ltd

ARC Capital Holdings 

Fund Details 

Bloomberg Code ARCH LN 

Reuters Code ARCH.L 

ISIN Code KYG0450H1002 

Listing AIM London Stock Exchange 

Inception 26 June 2006 

Domicile Cayman Islands 

Structure Closed-end 

Fund Performance As at 30-Jun-12 

NAV per Share 1 US$ 0.9543 

Total Net Assets 1 US$ 365.1m 

Issued Shares 2 382.6 m 

Share Price US$ 0.5725 

Market Capitalization US$ 219.1 m 

Portfolio Breakdown (% of NAV) 

Major Holdings As at 30-Jun-12 

Funtalk China Holdings (formerly Beijing Pypo) 23.2% 

Orient Home Investment Deposit (RMB480m) 20.8% 

Goodbaby Group 12.8% 

Xiajin Dairy 7.1% 

Jiadeli Holdback (RMB100m) 4.8% 

Bridge Loan to “DCSI” (OH Retail Sale) 4.3% 

Xian University 3.9% 

Buchang Pharmaceutical 3.6% 

Beijing Science Technology Mgmt College 3.2% 

Huiyin Household Appliances 2.9% 

Hainan Airport 0.1% 

Portfolio Valuation (US$m) 

Major Holdings 

As at 31- 

Mar-12 

As at 30- 

Jun-12 

Funtalk China Holdings (formerly Beijing Pypo) 93.3 84.7 

Orient Home Investment Deposit (RMB480m) 76.3 75.9 

Goodbaby Listco 52.1 43.2 

Goodbaby Private 3.5 3.5 

Xiajin Dairy 26.0 26.0 

Jiadeli Holdback (RMB100m) 17.7 17.6 

Xian University 16.5 14.3 

Bridge Loan to “DCSI” (OH Retail Sale) 15.9 15.9 

Buchang Pharmaceutical 13.0 13.0 

Huiyin Household Appliances 12.9 10.6 

Beijing Science Technology Mgmt College 11.8 11.8 

UCCAL 3 3.2 - 

Hainan Airport 1.2 0.4 

Quarterly Newsletter Q2 2012 

Share Price / NAV per Share (US$) 

www.arch-fund.com ©2012 ARCH Page 1 of 10 

1.80 

1.60 

1.40 

1.20 

1.00 

0.80 

0.60 

0.40 

0.20 

Portfolio Investment Breakdown (% of NAV) 

7% 

11% 

24% 

4% 4% 4% 

46% 

Consumer Products Investment Deposits 

Specialty Retail Cash & Cash Equivalents 

Other Investment Pharmaceutical 

Other Net Assets 

� Other Investment: US$15.9m Bridge Loan to “DCSI” 

� Other Net Assets mainly include US$17.6m Jiadeli holdback, US$14.9m 

Funtalk Receivable and US$3.6m Properties less US$8.1m Accrued Taxation 

US$ NAV 

Return % 

Market Price 

NAV Per Share 

1) In July 2012, ARCH completed the tender of 27,816,595 shares at a tender price of $1.01 per share, distributing a total 

of $28.1m cash. Had the tender offer been completed prior to 30 June 2012, ARCH’s NAV and NAV per share as at 

30 June 2012 would have been adjusted to US$337.0m and US$0.9499 per share, respectively. 

2) Had the tender shares been cancelled prior to 30 June 2012, ARCH would have 354.8m shares in issue. 

3) UCCAL was fully realised 5 June 2012 

Jun-06 

Sep-06 

Dec-06 

Mar-07 

Jun-07 

Sep-07 

Dec-07 

Mar-08 

Jun-08 

Sep-08 

Dec-08 

Mar-09 

Jun-09 

Sep-09 

Dec-09 

Mar-10 

Jun-10 

Sep-10 

Dec-10 

Mar-11 

Jun-11 

Sep-11 

Dec-11 

Mar-12 

Jun-12 

Q1 Q2 Q3 Q4 YTD 

2006 -2.7% -0.6% -3.3% 

2007 37.1% -0.2% -0.1% -0.5% 36.0% 

2008 1.9% 1.7% 3.9% -5.4% 1.9% 

2009 -12.3% 3.6% 7.6% 3.5% 1.2% 

2010 1.1% -1.6% 6.1% -0.1% 5.4% 

2011 -1.7% -5.1% -20.4% -3.6% -28.4% 

2012 -0.8% -6.1% -6.8%

Investment Objective 

ARC Capital Holdings Limited (ARCH) is a private equity fund 

focused on investing in retail and consumer products companies 

primarily in Greater China. ARCH is traded on the AIM market of 

the London Stock Exchange. 

Since inception, ARCH has developed a portfolio of 16 

investments and has realised 10 to date. ARCH continues to be 

focused on enhancing the operational capabilities and value of its 

remaining investee companies as it realises its portfolio. 

Management Update 

During the second quarter of 2012, ARCH held its first annual 

general meeting (“AGM”) on 25 April 2012, where the following 

resolutions were passed: 

� Resolution 1 – ordinary resolution to adopt a permanent 

share buy-back authority for the Board of Directors: To 

facilitate the return of capital and income to shareholders, 

ARCH proposed to establish a permanent share buy-back 

authority. This authority would give the Board the ongoing 

ability to make both on-market and off-market purchases of 

ordinary shares, including by way of a capital reduction, and 

the flexibility and discretion to set the parameters for such 

purchases. 

� Resolution 2 – ordinary resolution to adopt the Board’s 

Discount Control Policy for 2012: To distribute all net 

proceeds under ARCH’s investment policy in a way that 

reduces the share discount to net asset value per share. 

Such distributions are expected to be made using tender 

offers and/or capital reductions, or a combination of these 

methods, together with share buy backs if they are 

considered by the Board to be highly accretive to the net 

asset value per share. 

Following the newly adopted realisation strategy, ARCH 

distributed a shareholder circular on 6 June 2012 detailing a 

tender offer to purchase up to 7.27% of the issued and 

outstanding ordinary shares of ARCH at a price of US$1.01 per 

share. The tender offer closed on 6 July 2012, representing 

approximately US$28.1 million (US$25 million from ARCH’s cash 

reserves plus US$3.1 million final payment from the UCCAL 

portfolio investment received on 5 June 2012). Together with 

previous distributions, ARCH has distributed a total of US$92.8 

million to date. 

On 7 June 2012, ARCH announced the appointment of Mr. Tian- 

Cho (TC) Chu as an Independent Non-Executive Director of the 

Board. Mr. Chu was formerly at McKinsey & Company, Inc. as a 

Senior Partner and the leader of its Greater China Healthcare, 

Consumer and Retail practices. Mr. Chu had been with McKinsey 

for over 27 years and has held numerous leadership positions 

within the firm’s Hong Kong and Greater China offices. Further 

details of Mr. Chu’s biography are available on the ARCH website. 


Management Update (continued) 

With the appointment of Mr. Chu, Mr. Michael Guy Hilliard Heald 

stepped down as an Independent Non-Executive Director and Mr. 

Steven Feniger was appointed as Chairman of the Board and Ms. 

Helen Wong was appointed as Vice Chair. 

Economy 

During the second quarter of 2012, China’s YoY GDP grew 7.6%, 

slowing from the previous quarter’s YoY GDP growth of 8.1%. 

Despite being in line with analyst expectations, this growth figure 

was the slowest in three years, increasing concerns of a slowdown 

in China’s economy. Fixed asset investment increased 20.4% YoY 

during the first half of 2012. The Chinese government’s monetary 

policies to control inflation have shown results as inflation rose only 

2.9% YoY during the quarter. Retail sales reported 13.9% YoY 

growth during the second quarter of 2012 as domestic consumption 

remained steady. 

www.arch-fund.com ©2012 ARCH Page 2 of 10

FUNTALK 

Date of Investment: November 2007 

Initial Investment Cost: US$90.0 million 

Investment Instrument: Common Equity 

Shareholding: 18% (1) 

Date of Exit: n/a 

Exit Type: n/a 

Current Value: US$84.7 million (2) 

1. On a fully diluted basis after privatisation 

2. As at 30 June 2012 

Note: A share placement of US$22m was completed in December 2009 

upon the successful transfer to NASDAQ, subsequently the company was 

privatised in August 2011 

Brief Description 

• Funtalk is a leading independent retailer of mobile 

handsets and related accessories and services, operating 

1,116 retail stores across China. In addition, Funtalk 

operates a national wholesale business, distributing mobile 

handsets to over 12,000 retail outlets. Until August 2011, 

Funtalk was listed on NASDAQ and was subsequently 

privatized by a consortium of its original investors including 

ARCH, Funtalk management and Golden Meditech. 

• PAG Capital invested an initial US$150m in August 2011 to 

fund the buyout of Funtalk’s public shareholders and the 

company’s continued growth. PAG Capital invested an 

additional US$100m in December 2011 to further expand 

the company’s operations. 

Financial Performance 

• April 2012 (FYE March 2012) 

– YoY Sales: +40% 

– YoY EBITDA: -7% 

– YoY Net Profit: -9% 

Business Update 


• FY2012 financials exceeded expectations having reported 

30% YoY growth in revenue and 26% YoY growth in net 

profit. Management accounts for the month of April 2012 

reported 40% YoY growth in revenue, exceeding 

management’s budget for the month, however gross 

margins were lower than expected due to an under-accrual 

for carrier-related business income and lower margins from 

the sale of mobile devices. This resulted in a 7% and 9% 

YoY drop in EBITDA and net profit, respectively, for the 

month. 

• Despite April 2012’s lower net profit figures, the 

management’s budget for FY2013 is still on target 

forecasting US$1.8b in revenue and US$65m in net profit, 

mainly driven by the opening of new stores and carrier 

contract sales growth. 

• Store count growth is still expected to double by year end 

FY2013, from its current retail store count of 1,116 stores, 

mainly focused on carrier-related business service stores. 

Opportunistic acquisitions will also be considered. 

• Due to ongoing negotiations on the value of Funtalk 

shares, there was a delay in settling the US$14.9m 

outstanding valuation adjustment balance (US$13.7m 

warrant agreements and US$1.2m repayment of a loan to 

Funtalk’s management). ARCH will set a deadline for 

Funtalk’s management to settle on the valuation 

adjustment and will try to complete the transaction as 

quickly as possible. ARCH may receive Funtalk shares 

and/or cash to settle the valuation adjustment. This 

settlement is between ARCH and the personal accounts of 

Funtalk’s management and therefore does not affect 

Funtalk’s issued share capital or cash position. 

• Exit strategy still 2-3 years as either a trade sale or IPO. 

Valuation 

• Market approach using EV/EBITDA 

• A derivative pricing model was applied in June 2012 to 

quantify the value of the redemption option of PAG 

Capital’s structured securities, should the option be 

exercised. 

• Decrease in valuation from Q1 2012 mainly due to a drop 

in comparables. 


GOODBABY (Listco + Private) 

Date of Investment: June 2006 



Shareholding Listco: 15% (1) 

Shareholding Private: 14% 

Date of Exit: November 2010 (2) 

Exit Type: HKSE IPO 

Current Value Listco Hldg: US$43.2 million (3) 

Current Value Private Hldg: US$3.5 million (3) 

1. Listco ownership on a fully diluted basis 

2. IPO on 24 November 2010 with a small realisation and shareholder loan 

repayment with interest totalling US$17.7m 

3. As at 30 June 2012 


• Goodbaby Listco is one of the world’s leading durable 

juvenile products companies. It is the leading supplier of 

strollers in the US and Europe, and it has the largest 

market share of stroller sales and retail value in China. As 

at 31 December 2011, Goodbaby Listco sold its products 

through its extensive distribution network of 505 

distributors, with an end distribution network of 10,894 

maternity and childcare specialty stores, 1,667 

hypermarket outlet and 952 department store outlets. 

• Goodbaby Private is a leading integrated baby and children 

distribution and retail company in China. It holds the bestknown 

brand of children’s products in China – Goodbaby. 

Goodbaby Private also has a 70% equity interest in a joint 

venture with Mothercare UK to open and operate 

Mothercare retail stores in China. As of 29 February 2012, 

Goodbaby Private had nearly 5,000 outlets in China, 

including 18 Mothercare, and various Goodbaby-branded 

products and third party brands stores. 


• Listco (2011) 




• Private (May 2012) 


– YoY EBITDA: +200% 

– YoY Net Profit: +105% 


� Goodbaby Listco Share Price (as of 2 August 2012): HK$1.80 

� 63.3% decrease in IPO price 


• On 8 July 2012, Goodbaby Listco issued a profit warning 

announcement stating that based on the preliminary review 

of the unaudited management account, it is expected the 

company will experience a YoY decline in its net profit for 

the first half of 2012. This decline in profitability is primarily 

attributable to losses arising from the change in value of 

the company’s derivative financial instruments in 1H 2012 

caused by fluctuation in the RMB. These derivative 

financial instruments are forward currency contracts 

denominated in USD which were entered into by the 

company to manage its risk exposure against appreciation 

in the RMB. 

• Since the release of the profit warning, Goodbaby Listco’s 

share price has declined by over 15%. 

• ARCH will continue to monitor the company’s share price 

to optimise realisation, keeping in mind its director blackout 

periods. 

• Goodbaby Listco’s 1H 2012 financials are expected to be 

released in August 2012. 

• Goodbaby’s Private business continued its growth 

throughout the year with May 2012 figures reporting 

positive EBITDA and net profit, exceeding management 

budgets. 

Valuation 

• Listco is marked-to-market on a monthly basis with no 

discount applied since the expiration of the lock-up. 

• Private is marked at net asset value with a 30% 

marketability discount and management earn-out dilution. 


XIAJIN DAIRY 

Date of Investment: April 2007 



Shareholding: 46% 




1. As at 30 June 2012 


• Xiajin Dairy has been engaged in the manufacture and 

distribution of dairy products in China for 19 years. It is the 

largest regional dairy product enterprise in Ningxia 

province. Its self-owned brand, “XIAJIN”, has more than a 

50% market share in Ningxia province, and also distributes 

to nearby provinces and Beijing. It has extensive access to 

high quality local raw milk resources in Ningxia. Xiajin 

Dairy’s major products are UHT milk, flavoured milk and 

yogurt which account for more than 90% of sales. 

XIAN UNIVERSITY 

Date of Investment: August 2008 



Shareholding: 27% 




1. As at 30 June 2012 


• Shaanxi Dade is an education holding company 

specialising in higher vocational education in China with a 

portfolio of three schools and colleges, including Xian 

International University, one of the largest private 

universities in China. Shaanxi Dade offers accredited 

bachelor and associate degree programs, non-degree 

post-secondary education programs and vocational training 

programs with a wide range of facilities including foreign 

language, nursing, accounting, information technology and 

hotel management. 


• 1H 2012 


– YoY EBITDA: +23% 




• 1H 2012 reported strong growth despite increasing raw milk and 

raw material costs. Overall market consumption of dairy 

products and liquid milk sales raised 1H 2012 YoY sales by 16% 

with EBITDA and net profit increasing YoY 23% and 59%, 

respectively, due to product mix shifts which sold higher margin 

products. 

• YoY gross margins and EBITDA margins increased by 4.4% and 

3.4% compared to the same period in 2011. 

• Management expects continued growth in sales and profitability 

throughout 2012 from an increase in total sales volume in liquid 

milk and higher margin products. 

• ARCH has engaged a domestic investment bank to initiate a 

sale process. 

Valuation 



• Q1 2012 

– YoY Sales: -4% 


– YoY Student Number: -4% 


• Discussions with potential buyers are still ongoing. Due to 

commercial sensitivities surrounding the sale process, details 

cannot be provided at this time. 

• Due to the nature of its business, the university has cyclical cash 

inflows concentrated in August and September of each year 

(new academic year). As a result, the university’s cash balance 

has currently dropped and is expected to remain at low levels 

until the start of the new academic year. 

Valuation 


• Decline in valuation was due to the current drop in cash balance 

of the university and increased leverage taken by the university. 

These loans were taken by the university to fund the 

construction of new academic buildings on the campus. The 

cash balance is expected to recover at the start of the new 

academic year. 


JIADELI HOLDBACK 

Due Date of Payment: October 2011 


Investment Instrument: Holdback Payment 

Shareholding: n/a 




1. As at 30 June 2012. Difference in value versus cost due to RMB 

fluctuation. 

Transaction Description 

• As part of the sale of Jiadeli Supermarkets to HNA Group on 11 

October 2010 for a total consideration of RMB1.1 billion 

(equivalent to US$164.8 million), it was agreed that a holdback 

of RMB100 million was to be paid to ARCH 12 months after 

closing, subject to completion of a post closing audit. 

• In March 2011, the audit was completed by RSM China, a 

domestic accounting firm appointed by HNA Group, which 

indicated a net loss of RMB34m compared to a net profit of 

RMB34m as audited by Deloitte & Touche (Jiadeli’s auditors). As 

a result, HNA Group has not released the holdback. 

• In August 2011, ARCH and HNA Group engaged Ernst & Young 

as the mediator to review the alleged discrepancies. 

BRIDGE LOAN TO “DCSI” 

Date of Investment: December 2011 


Investment Instrument: Debt 





1. As at 30 June 2012 

Transaction Update 



• In late June 2012, E&Y reported that its work was inconclusive 

due to certain discrepancies found in the figures presented by 

HNA Group. 

• On 25 July 2012, ARCH met with HNA’s management to 

discuss the settlement. Negotiations are ongoing however HNA 

and ARCH may agree to a compromise to facilitate an early 

settlement. 

• The Manager will keep shareholders updated on any 

developments. 

Valuation 

• The holdback is valued at cost. ARCH’s Valuation Committee 

will review the situation and make appropriate adjustments as 

necessary, pending progress of ongoing discussions with HNA’s 

management. 

• As part of the sale of Orient Home Retail to a domestic Chinese 

strategic investor (“DCSI”), ARCH provided DCSI with a oneyear, 

RMB100m bridge loan. 

• The loan was to be used by DCSI to meet Orient Home Retail’s 

urgent short term working capital needs during the transition of 

ownership. 

• DCSI will repay this loan once it has successfully renewed Orient 

Home Retail’s bank loans and has injected additional capital into 

the company. 

• The interest rate for the loan is 8% per annum 

• No material changes have occurred. 

Valuation 

• The loan is valued at cost. 


HUIYIN 

Date of Investment: November 2007 



Shareholding: 19% (1) 

Date of Exit: n/a (2) 



1. On a fully diluted basis 

2. HKSE IPO on 25 March 2010 with no realisation 

3. As at 30 June 2012 


• Huiyin is a leading retail chain operator and distributor of 

home appliances and consumer electronic products in the 

3 rd and 4 th tier cities of China. As at 31 December 2011, 

Huiyin had 61 self-managed stores and 157 franchise 

stores in Jiangsu and Anhui provinces. 


• 2011 





• On 15 June 2012, the company issued a profit warning 

announcement stating that it expected a significant YoY 

decline in its net profit for the first half of 2012. This decline 

in profitability is primarily due to the government macro 

policy and the increasing cost pressure in the home 

appliance industry in China. The announcement also stated 

that profitability may further be adversely affected by 

potential provisions to be made by the company, in respect 

of the amounts due from suppliers, which could result in 

lower rebate offerings. 

� Share Price (as of 2 August 2012): HK$0.36 

� 79.0% decrease in IPO price 

Business Update (cont’d) 


• The company’s margins continued to suffer due to 

diminishing rebates from suppliers and expiry of central 

government support policies for electrical appliance 

purchases. 

• Since the release of its profit warning, Huiyin’s share price 

has declined by over 16%. 

• On 30 June 2012, ARCH resigned its directorship on 

Huiyin’s Board. 

• On 20 July 2012, the company announced that it would 

issue medium-term notes totaling RMB390m. The 

company explained that the proceeds from the issue of the 

notes would be used to expand the sales network and 

repay part of the company’s bank debt. 

• ARCH will continue to monitor the company’s share price 

and will realise its holdings in an orderly fashion when the 

opportunity arises. 

Valuation 

• Marked-to-market on a monthly basis with no discount 

applied since expiration of lock-up. 


BUCHANG PHARMACEUTICAL 

Date of Investment: June 2011 



Shareholding: 0.3% 




1. As at 30 June 2012 


• Buchang is a leading non-SOE (state owned enterprise) 

pharmaceutical company in China and the largest TCM 

(Traditional Chinese Medicine) company in China by net 

profit in 2009. The company is mainly engaged in the R&D, 

production and sales of TCM for cardiovascular disease, 

holding the largest number of patents, a large product 

portfolio, leading market share (7%), the largest number of 

sales staff and a leading sales network amongst all the 

pharmaceutical companies in China. 

BEIJING SCIENCE TECHNOLOGY 








1. As at 30 June 2012 



• ARCH completed arbitration with the company and its founder 

• The Beijing court Science approved Technology ARCH’s Management asset preservation College application to 

freeze was established certain assets in 1985 of the and company is the third and largest its founder during the 

arbitration private university in Beijing. 

• ARCH received a favorable arbitration award in December 2011 

for the full investment amount plus interest at the prevailing 1 

year bank savings rate 

• A judge has been designated to handle the auction of the frozen 

assets (Sanyimiao campus). 


• 2011 





• The company completed its conversion to a joint stock company 

in March 2012, which is required for an eventual A-share IPO. 

• ARCH attended a shareholder meeting at the end of June 2012 

where the company’s management indicated IPO progress is on 

track. 

• ARCH maintains a positive outlook for the company in 

preparation for its a-share IPO, however is wary that certain 

delays may occur during the filing process. 

Valuation 

• The investment is valued at cost. 


• At the end of June 2012, the court appointed an appraiser to 

conduct the valuation assessment of the frozen assets. It is 

expected that the valuation of the assets will take approximately 

3 months to complete. ARCH has requested that the court and 

the appraiser release the valuation report as soon as possible. 

• Following the courts administrative procedures leading to the 

auction, ARCH expects the auction process to start in late 

September 2012, if there are no further delays. The auction 

process could still be frustrated by the school’s owner as he will 

have the right to challenge the valuation stated in the valuation 

report. Barring any disputes to the valuation, the court will 

proceed to auction the properties. 

• ARCH will continue to focus its efforts to expedite the legal 

process to ensure repayment of the loan, which may be in 2013 

based on conservative estimates. 

Valuation 

• There has been no change to the valuation of the loan which is 

valued at 0.5x cost. 


UCCAL 





Date of Exit: June 2012 

Exit Type: Trade Sale 


1. As at 30 June 2012. Fully realised on 5 June 2012. 


• UCCAL is principally engaged in the business of 

international apparel brand retailing, wholesaling 

and distribution in China. 

ORIENT HOME INVESTMENT DEPOSIT 



Investment Instrument: Investment Deposit 





1. As at 30 June 2012. Difference in value versus cost due to RMB 

fluctuation. 


• Orient Home Retail is a home improvement retailer 

founded in China in 1999. As of June 2011, Orient Home 

Retail had 24 chain stores in cities including Beijing, 

Shenyang and Chengdu. 


• In January 2012, following the sale of Orient Home Retail, 

ARCH issued, an official demand letter to Orient Home Co, 

the holding company of Orient Home’s property portfolio, 

requiring the full repayment of the RMB480m investment 

deposit made in December 2010. Orient Home Co then 

issued a formal confirmation letter to KPMG (ARCH’s 

auditors) on 26 March 2012, acknowledging its outstanding 

liability. Since then, ARCH entered a tri-party agreement 

with Orient Group on 15 May 2012 which acknowledges 

ARCH’s right to the RMB480m investment deposit and 

outlines an arrangement for ARCH to recover the deposit, 

either in the form of a pro rata equity interest in OH 

Property or installment payments from OH Property cash 

flows for the full amount of the deposit. 



• Originally structured as an equity and non-interest-bearing loan 

• Equity was sold to a third party in December 2009 and loan was 

converted into an interest-bearing loan 

• To date, all principal and interest has been paid. 


• On 5 June 2012, ARCH received the final outstanding payment 

of US$3.2m, fully realising its investment in the company. 

Together with the US$792K partial payment received on 27 April 

2012, a total of US$3.3m was included for distribution to ARCH’s 

shareholders through a tender offer. 

Valuation 

• Fully realised as of 5 June 2012. 

Transaction Update (cont’d) 

• Up to RMB600m in debt may be attributed to OH Property but 

has not been transferred from the Orient Group’s balance sheet. 

ARCH’s RMB480m investment deposit has been acknowledged 

to receive its full credit and the value of any OH Property shares 

received by ARCH will have already taken into account a 

maximum of RMB600m in transferred debt. 

• KPMG have qualified their audit opinion in respect of the 

RMB480m investment deposit in Orient Home Co as highlighted 

in ARCH’s 2011 Annual Report. 

• The tri-party agreement is still in effect as OH Group continues to 

work with the third party purchaser of the properties. ARCH has 

started a parallel effort to negotiate directly with OH Group on 

possibly selling the properties individually to recover the 

investment deposit. ARCH met with OH Group on 25 July 2012 

to discuss alternative procedures to sell the properties directly 

with OH Group, if the sale to the third party (as per the tri-party 

agreement) is delayed or fails to complete. 

• ARCH has started discussions with independent valuers to 

assess the properties and expects to appoint a valuer shortly. 

Valuation 

• As there have been no major developments since the signing of 

the tri-party agreement, ARCH’s Valuation Committee will 

continue to value the investment deposit at cost unless any new 

developments have a material affect on the recovery of the 

investment deposit. 


China Economic Indicators 

GDP (YOY 2012 Q2) 7.6% 

Industrial Output (YOY 2012 Q2) 9.5% 

CPI (YOY 2012 Q2) 2.9% 

Exports (YOY 2012 Q2) 10.5% 

Imports (YOY 2012 Q2) 6.5% 

Retail Sales (YOY 2012 Q2) 13.9% 

Exchange Rate (30 June 2012) RMB6.36 : US$ 1 

Source: National Bureau of Statistics of China 

Important Information 


The information contained in this Quarterly Update has been prepared solely by ARC Capital Partners Limited (“the Manager”). None of the information contained in this Quarterly Update is 

intended as financial, investment or professional advice and should not be taken as such by any party receiving it or obtaining it through any means. Nothing in this Quarterly Update should 

be construed as an offer to sell or a solicitation of an offer to buy any security or to participate in any trading strategy. Contents are based on sources which the Manager believes to be 

reliable, however no warranty or representation, express or implied is given as to accuracy and completeness. You should rely on independent confirmation of any information contained 

herein before relying on that information for any purpose whatsoever. Any forward looking statement included in this Quarterly Update is based on the opinions or expectations of the 

Manager, and actual results could differ materially. Historical performance is not an indicator of future performance and should not be assumed or construed as such. Finally, all the 

information contained herein including market data and prices are subject to change without notice. The information contained herein is being made available to institutional investors and 

investment professionals only as defined in the Financial Services and Markets Act 2000. 

ARC Capital Partners Limited is the investment manager of ARC Capital Holdings Limited. The Manager is not regulated by the Financial Services Authority. 

www.arch-fund.com 

Portfolio Manager 

Rachel Y. Chiang 

Investment Manager 

ARC Capital Partners Limited 

T: (86) 21 6113 5818 F: (86) 21 6113 5806 

arch@arccapitalchina.com 

Broker 

Numis Securities Limited 

David Benda / Hugh Jonathan 

T: (44) 20 7260 1000 F: (44) 20 7260 1001 

d.benda@numiscorp.com www.numiscorp.com 

Nominated Adviser 

Grant Thornton Corporate Finance 

Philip Secrett 

T: (44) 20 7383 5100 philip.j.secrett@uk.gt.com

ARC Capital Holdings Ltd

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